Abstract
This article discusses some central issues relating to LDC debt relief. It analyses the meaning of debt relief, how creditors can gain from debt relief and the role of the official sector in debt relief. Debt relief may lead to no change, to a decline, or even to an increase in the actual repayments that are made. When there is uncertainty about capacity to pay, debt relief benefits the debtor country. There is a paradoxical possibility that debt relief would yield an increase in repayments. This provides the basis for the argument that creditors may gain from some degree of debt relief. Finally, the study analyses some of the costs and benefits of the Brady plan and the lending activities of the Bretton Woods institutions.
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