Heavily Indebted Poor Countries Research Articles

Refocusing on the Objectives: A Critique of the U.K.'s Debt Relief (Developing Countries) Act, 2010

Managing unsustainable debt and the crises that have ensued from the sovereign debt of developing countries have not only left the countries enmeshed in excruciating poverty but also threatened the stability of the international financial system. Concerted efforts have been progressively formulated and implemented by the international community to solve the unsustainable debt crisis faced by developing countries. Chief of these efforts are the Heavily Indebted Poor Countries (HIPC) Initiative and the Multilateral Debt Relief embarked upon by the International Monetary Fund and the World Bank. The HIPC Initiative aim of reducing to sustainable levels the debt of countries classified as heavily indebted poor countries (HIPCs), while the MDRI was added as a supplement aimed at achieving 100% debt relief for countries completing the HIPC Initiative. One of the phenomena that has been variously and widely blamed as a set-back to the HIPC Initiative and the MDRI is the perceived activities of vulture creditors who are accused of profiteering on the external debt of poor countries by purchasing them at steep discount in the secondary market and suing for the full value of the debt plus all interests and associated fees. Studies by both the World Bank and the IMF, as well as various experts commissioned by major world bodies, indicate that a substantial portion of the monies saved poor countries by the HIPC Initiative and MDRI which should have been channeled to developmental activities – such as infrastructural development, education, food, health, and generally uplifting the living standards of the people – are lost to vulture creditors who trade on the debts of these countries. These studies also indicate that the activities of the vulture creditors also pose serious developmental challenges to developing countries falling outside the HIPC Initiative – particularly those eligible to borrow from the International Development Association’s concessional loan program – and a threat to the stability of the international financial system. In response to the perceived menace of the vulture creditors, major policy and legislative responses have been undertaken by various countries to check their activities. These include the “Stop Vulture Funds” bill (the Bill) pending before the United States’ Congress and the United Kingdom’s “Debt Relief (Developing Countries) Act” (the Act) in force in the U.K. since April 2010. This paper is a critique of the Act. It examines the provisions of the Act in the light of its avowed objectives and the objective of the international community – to curb what has now become known as the “vulture culture”, make debt relief work for the poor and preserve the stability of the international financial system. A brief introduction introduces the problem of debt, debt relief and the vulture culture in developing countries. Later parts of the paper delve into an examination of the salient provisions of the Act in the light of its objectives, necessary comparisons with the Bill, and recommendations for reforms.

Togo: Enhanced Heavily Indebted Poor Countries (HIPC) Initiative Completion Point Document and Multilateral Debt Relief Initiative (MDRI)

This paper discusses Togo’s progress under the Enhanced Heavily Indebted Poor Countries (HIPC) Initiative. In November 2008, the Boards of Executive Directors of the IDA and the IMF agreed that Togo had met the requirements for reaching the decision point under the Enhanced HIPC Initiative. This paper assesses Togo’s performance in reaching the completion point under the Enhanced HIPC Initiative and provides an updated debt relief analysis. In the opinion of the IDA and IMF staff, satisfactory progress has been made in implementing the reforms specified for reaching the completion point.

C�te d'Ivoire: 2011 Article IV Consultation and Requests for a Three-Year Arrangement Under the Extended Credit Facility and for Additional Interim Assistance Under the Enhanced Initiative for Heavily Indebted Poor Countries: Staff Report; Public Information Notice and Press Release on the Executive Board Discussion; and Statement by the Executive Director for C�te d'Ivoire.

C�te d'Ivoire: 2011 Article IV Consultation and Requests for a Three-Year Arrangement Under the Extended Credit Facility and for Additional Interim Assistance Under the Enhanced Initiative for Heavily Indebted Poor Countries: Staff Report; Public Information Notice and Press Release on the Executive Board Discussion; and Statement by the Executive Director for C�te d'Ivoire.

Guyana's Poverty Reduction Strategy and Social Expenditure

In 1997, Guyana started to receive debt relief under the Heavily Indebted Poor Countries (HIPC) Initiative. In 2001, to qualify for the Enhanced HIPC Initiative, Guyana developed a Poverty Reduction Strategy (PRS) that committed the country to a reorientation of its economic and social policies towards the objectives of the PRS and the achievement of the Millennium Development Goals. Against this background, this article examines whether the HIPC initiatives and the accompanying PRS have translated into increases in the level and quality of social expenditure. We find that there has been a substantial increase in social spending since 1997. In terms of quality of expenditure, our analysis suggests that without further strengthening of institutions responsible for managing and monitoring public expenditure, debt relief is unlikely to provide more than temporary succour. En 1997, la Guyane est devenue beneficiaire d′un allegement de ses dettes dans le cadre de l′initiative PPTE. En 2001, afin de pouvoir beneficier de l′initiative PPTE renforcee, la Guyane elabora une Strategie de Reduction de la Pauvrete (SRP) engageant le pays a mettre en œuvre une reorientation de ses politiques economiques et sociales au service des Objectifs du Millenaire pour le developpement et de la reduction de la pauvrete. Le but de cet article est de determiner si les initiatives PPTE et la SRP qui les a accompagnees, se sont traduites par des augmentations quantitative et qualitative des depenses sociales. Nous constatons que les depenses sociales ont augmente substantiellement depuis 1997. Par contre, notre analyse suggere qu’en ce qui concerne la qualite des depenses, si les institutions chargees de gerer et de controler les depenses publiques ne sont pas renforcees davantage, l′allegement de la dette risque de ne procurer qu′un soulagement temporaire.

Conventional ethics and the United Nations debt relief project

It is often assumed that conventional ethics will contribute positively to economics and business, but here, this judgment will be examined. The conventional ethics of our time is dominated by altruistic philosophy, which has deep roots in religion. Such an idealistic ‘altruistic ethics’ especially emphasizes helping the least advantaged. This principle is contrasted with a more profane ‘reciprocal ethics.’ This term is used for the principle of mutual advantage central to a number of significant philosophers. This latter principle is compatible with the practical norms constituting the morals of the market, while the former implies major adjustment of behavior and policies. Many ethicists consider their field to be ‘applied ethics,’ bringing the concrete rules and practices of the economic sector closer to honored first principles of philosophy. Is it reasonable to expect an influence by the ideas of altruistic ethics to improve the morals and policies of the economy? The process of the Heavily Indebted Poor Countries (HIPC) Initiative of the United Nations illustrates a probably crucial connection with altruistic ethics. Is this project, supported by religiously inspired groups, a sound way to treat a serious global problem? The disadvantages of this project are discussed and alternatives with better potential are presented. The article suggests that altruistic ethics is a dubious foundation for constructive morality and that its dominance in contemporary philosophy constitutes a major obstacle to a more open-minded analysis and sound policies.

Heavily Indebted Countries (HIPC) Initiative and Multilateral Debt Relief Initiative (MDRI)--Status of Implementation

This report provides an update on the status of implementation, impact, and costs of the Heavily Indebted Poor Country (HIPC) Initiative and the Multilateral Debt Relief Initiative (MDRI). Debt relief provided under the Initiatives has substantially alleviated debt burdens in recipient countries. Through the continued use by IDA and the Fund of the flexibility available in the framework governing the HIPC Initiative and the MDRI, significant progress has been achieved under the Initiatives since the last report.

The HIPC Debt Relief Bill: making forgiveness compulsory

Debt relief to the world's poorest countries has been an issue since the launch of the Heavily Indebted Poor Countries (HIPC) Initiative in the 1990s. Draft UK legislation – the Debt Relief (Developing Countries) Bill – seeks to introduce a mandatory element to debt relief under the HIPC Initiative. This paper looks at the background to the Bill and its key features.

Debt relief and beyond: lessons learned and challenges ahead

Heavily indebted low-income countries benefited from significant debt relief over the past decade. Under the Heavily Indebted Poor Countries (HIPC) Initiative and the Multilateral Debt Relief Initiative (MDRI), assistance of about $117 billion in nominal terms had been committed to 35 HIPC as of end-April 2009. This debt relief represents about half of the 2007 Gross Domestic Product (GDP) of these countries, whose debt burden is expected to drop by more than 80 percent once full debt relief is granted. As a result of relief already provided, debt-service payments have plummeted and expenditures on pro-poor growth programs increased. The book is divided into four parts. Part one examines the design of debt-relief initiatives and provides evidence of its effect on education, health, and economic growth. Part two describes the risks and opportunities developing countries face following debt relief. It identifies how they can safeguard debt sustainability; describes the role of sovereign risk for private sector access to capital; and draws lessons from the experience of market-access countries on the links between sovereign debt and development. Part three examines the concept and various policy proposals of dealing with 'odious' debt. Part four looks at debt management, debt restructuring, and the interplay between debt and fiscal policies. It provides guidance on debut sovereign bond issues; examines the issuance and management of sub-national debt; describes the challenges of crafting fiscal policy and managing debt and oil revenues in a (temporarily) oil-rich country (the Republic of Congo); and draws lessons from Chile's experiences using debt swaps in the 1980s.

Maternal Health Care Seeking Behavior in a Post-Conflict HIPC: The Case of Rwanda

Rwanda is one of nine post-conflict heavily indebted poor countries (HIPC) of the world. There was a worsening of health indicators since the early nineties on account of conflict. In light of this, we examine factors affecting maternal health care seeking behavior in Rwanda using three rounds of Rwanda Demographic and Health Survey (RDHS) data (1992, 2000, and 2005). We find that progress towards increasing the share of assisted deliveries has been slow. There has been no significant increase in the proportion of women seeking antenatal care. This could partially explain why a large proportion of women continue to deliver at home without professional assistance. Further, women who gave birth in the 5 years preceding the 2000 RDHS are less likely to deliver in a health facility than those who gave birth in the 5 years preceding the 1992 RDHS. We do not find such a result for the year 2005. We also find that women are more likely to deliver at home with professional assistance in 2000 and 2005 compared to 1992.

Will World Bank and IMF Lending Lead to HIPC-IV? Debt Déjà-Vu All Over Again

Four years ago, the G-7 pushed through an unprecedented initiative forcing the international financial institutions to cancel 100 percent of their outstanding debt claims on the world’s poorest countries. Through the Multilateral Debt Relief Initiative (MDRI), these heavily indebted poor countries (HIPCs) stand to receive up to $60 billion in debt relief over time. Moreover, the World Bank, African Development Bank, and IMF shareholders approved a new debt sustainability framework to govern future lending decisions and prevent the need for yet another round of systemic debt relief. All parties emerged from these landmark agreements confident that the dragon of unsustainable debt finally had been slain. However, several unsettling trends raise serious questions about the finality of these actions. First, World Bank and AfDB lending disbursement volumes to these very same HIPC countries remain very high, and nearly the same as compared to pre-MDRI. Emergency IMF lending in response to the global economic crisis has compounded the situation. Second, IMF and World Bank growth projections for HIPCs remain overly rosy compared to actual and historical performance. Our new dataset of IMF growth projections suggests a structural optimism of at least one percentage point per year. Third, HIPCs continue to experience significant volatility in country performance measures that has a direct impact on their ability to carry debt sustainably. Taken together, these findings suggest that donor countries should re-examine the issue of debt sustainability in low-income countries and the system for determining the appropriate grant/loan mix. The upcoming IDA and AfDF replenishment negotiations present a timely opportunity to do so. Absent assertive and corrective action, the international community may be faced with the prospect of a HIPC IV agreement in the not too distant future.

Staff Guidance Note on the Application of the Joint Fund-Bank Debt Sustainability Framework for Low-Income Countries

The objective of the joint Bank-Fund debt sustainability framework for low-income countries is to support LICs in their efforts to achieve their development goals without creating future debt problems. Countries that have received debt relief under the Heavily Indebted Poor Countries (HIPC) Initiative and the Multilateral Debt Relief Initiative (MDRI) need to be kept on a sustainable track. Under the framework, country DSAs are prepared jointly by Bank and Fund staff, with close collaboration between the two staffs on the design of the macroeconomic baseline, alternative scenarios, the debt distress rating, and the drafting of the write-up

Union of the Comoros: Enhanced Heavily Indebted Poor Countries (HIPC) Initiative- Decision Point Document

Union of the Comoros: Enhanced Heavily Indebted Poor Countries (HIPC) Initiative- Decision Point Document

Guinea-Bissau: Enhanced Initiative for Heavily Indebted Poor Countries-Completion Point Document and Multilateral Debt Relief Initiative

According to IMF and IDA authorities, Guinea-Bissau had met the requirements for reaching the decision point under the Enhanced Heavily Indebted Poor Countries (HIPC) Initiative. The authorities appreciated the country’s tremendous efforts to reestablish economic, social, and institutional stability. In view of this, in addition to debt relief agreed at the decision point under the Enhanced Initiative for HIPC, they also agreed to topping up assistance at the completion point.

Liberia: Enhanced Initiative for Heavily Indebted Poor Countries Initiative: Request for Additional Interim Assistance; and Press Release

This paper reviews the Enhanced Initiative for Heavily Indebted Poor Countries (HIPC) Initiative for Liberia. Performance under the Extended Credit Facility (ECF)-supported program is solid. The third ECF review was completed on a lapse of time basis on December 18, 2009. All but one of the quantitative performance criteria (PC) for the end-June 2009 test date were observed. The PC on total revenue collection was not observed but the deviation was temporary and did not jeopardize program objectives. Structural reform commitments were largely met, though some with delays.

C�te d�Ivoire: Enhanced Initiative for Heavily Indebted Poor Countries Initiative: Request for Additional Interim Assistance; and Press Release

C�te d�Ivoire: Enhanced Initiative for Heavily Indebted Poor Countries Initiative: Request for Additional Interim Assistance; and Press Release

Democratic Republic of the Congo: Enhanced Initiative for Heavily Indebted Poor Countries: Completion Point Document and Multilateral Debt Relief Initiative Paper

"Volume 2010 (2010): Issue 360 (Dec 2010): Democratic Republic of the Congo: Enhanced Initiative for Heavily Indebted Poor Countries: Completion Point Document and Multilateral Debt Relief Initiative Paper" published on 14 Dec 2010 by International Monetary Fund.

Union of the Comoros: Enhanced Initiative for Heavily Indebted Poor Countries: Preliminary document

Union of the Comoros: Enhanced Initiative for Heavily Indebted Poor Countries: Preliminary document

Democratic Republic of the Congo: Staff Report for the 2009 Article IV Consultation, Request for a Three-Year Arrangement Under the Poverty Reduction and Growth Facility, and Request for Additional Interim Assistance Under the Enhanced Initiative for Heavily Indebted Poor Countries

Democratic Republic of the Congo: Staff Report for the 2009 Article IV Consultation, Request for a Three-Year Arrangement Under the Poverty Reduction and Growth Facility, and Request for Additional Interim Assistance Under the Enhanced Initiative for Heavily Indebted Poor Countries

The Loss of Sovereignty: How International Debt Relief Mechanisms Undermine Economic Self-Determination

This article discusses the process that debtor countries go through in the two mechanisms created to work out solutions for their huge and unpayable external debts, namely, the Paris Club and the Heavily Indebted Poor Countries (HIPC) Initiative. As the international lending process is structured today, it is through these mechanisms that debtor countries obtain debt forgiveness, reduction or rescheduling. The absolute control of these two mechanisms by creditor countries will be examined, together with the crucial role reserved to the International Monetary Fund (IMF) as the final dispenser of the ‘stamp of approval’ whether debtor countries will ultimately get debt relief. Also, this article identifies the so-called ‘conditionalities’ that are attached to debt relief obtained through the Paris Club and HIPC Initiative. What sort of policy prescriptions, ‘structural adjustments’ or other domestic changes are being pushed through these mechanisms? And finally, this article examines how these conditionalities comport with the principle of economic self-determination of peoples that supposedly guarantees their right to pursue an independent process of economic development. Essentially, this article attempts to answer these questions: Are the Paris Club and HIPC mechanisms fundamentally at odds with economic self-determination? And more generally, are they respectful of the ‘rule of law’ in the international system?

Heavily Indebted Poor Countries (HIPC) Initiative and Multilateral Debt Relief Initiative (MDRI) - Status of Implementation 2009

This paper updates the status of implementation, impact, and costs of the Enhanced Heavily Indebted Poor Country (HIPC) Initiative and the Multilateral Debt Relief Initiative (MDRI). Debt relief provided under the Initiatives has substantially alleviated debt burdens in recipient countries. Aided by continued flexibility on the part of IDA and the Fund, substantial progress has been achieved under the Initiatives since the last report, and a number of post-decision-point countries have already benefited from debt relief.