Delivering on Debt Relief: From IMF Gold to a New Aid Architecture

Delivering on Debt Relief: From IMF Gold to a New Aid Architecture

by Nancy Birdsall, John Williamson, Brian Deese
     
 

ISBN-10: 0881323314

ISBN-13: 9780881323313

Pub. Date: 04/30/2002

Publisher: Peterson Institute for International Economics

This study brings readers up to date on the complicated and controversial subject of debt relief for the poorest countries of the world. What has actually been achieved? Has debt relief provided truly additional resources to fight poverty? How will the design and timing of the "enhanced Highly Indebted Poor Country (HIPC) initiative" affect the development

Overview

This study brings readers up to date on the complicated and controversial subject of debt relief for the poorest countries of the world. What has actually been achieved? Has debt relief provided truly additional resources to fight poverty? How will the design and timing of the "enhanced Highly Indebted Poor Country (HIPC) initiative" affect the development prospects of the world's poorest countries and their people?

The study then moves on to address several broader policy questions. Is debt relief a step toward more efficient and equitable government spending, building better institutions, and attracting productive private investment in the poorest countries? Who pays for debt relief? Is there a case for further relief? Most importantly, how can the case for debt relief be sustained in a broader effort to combat poverty in the poorest countries?

About the Authors

Nancy Birdsall is the founding President of the Center for Global Development. Prior to launching the center, Birdsall served for three years as Senior Associate and Director of the Economic Reform Project at the Carnegie Endowment for International Peace. Her work at Carnegie focused on issues of globalization and inequality, as well as on the reform of the international financial institutions. From 1993 to 1998, Birdsall was Executive Vice-President of the Inter-American Development Bank, the largest of the regional development banks, where she oversaw a $30 billion public and private loan portfolio. Before joining the Inter-American Development Bank, Birdsall spent 14 years in research, policy, and management positions at the World Bank, most recently as Director of the Policy Research Department. Birdsall is the author, co-author, or editor of more than a dozen books and monographs, including, most recently, Population Matters: Demographic Change, Economic Growth and Poverty in the Developing World , Washington Contentious: Economic Policies for Social Equity in Latin America , and New Markets, New Opportunities? Economic and Social Mobility in a Changing World . She has also written more than 75 articles for books and scholarly journals published in English and Spanish. Shorter pieces of her writing have appeared in dozens of U.S. and Latin American newspapers and periodicals.

Product Details

ISBN-13:
9780881323313
Publisher:
Peterson Institute for International Economics
Publication date:
04/30/2002
Edition description:
New Edition
Pages:
162
Product dimensions:
5.90(w) x 8.90(h) x 0.40(d)

Table of Contents

Forewordix
Prefacexi
1Introduction1
Group A versus Group B1
Expanding Debt Relief4
Reinventing the Aid Architecture6
Appendix 1.1Ten Questions about Debt and Debt Relief8
2The HIPC Initiative: Background and Critiques13
The Heavily Indebted Poor Countries19
Recent Debt Relief Initiatives21
The Enhanced HIPC Framework26
Critiques of the Enhanced HIPC Initiative33
3The Case for More41
Debt Sustainability41
The Millennium Development Goals44
4What Form of More?49
Political Resonance50
Additionality55
Redistribution61
Efficiency66
Country Selectivity75
Summary78
5Deepening and Extending Debt Reduction79
Deeper Relief80
Making More Countries Eligible86
A Contingency Facility91
Financing More Debt Relief93
6A New Aid Architecture101
The HIPC Procedure102
Grants, Not Just Loans106
Incremental Proposals to Increase Donor Accountability108
Donor Incentives for Selectivity110
Exploiting Multilateralism: The Common Pool113
Sovereign Debt: Building on the HIPC Initiative114
7Conclusions115
Whether to Extend More Debt Relief116
How to Extend the HIPC Initiative117
Cost of the Extensions117
Toward a New Aid Architecture118
Appendix AMultilateral Institutions Participating in the HIPC Initiative119
Appendix BCountries Classified by Income121
Appendix COdious Debt123
References147
Glossary151
Index153
Tables
Table 2.1Resource flows to HIPCs and all developing countries, 1980-9918
Table 2.2Growth in HIPCs and other developing countries, 1980-9919
Table 2.3Heavily indebted poor countries29
Table 2.4Debt statistics for HIPC countries30
Table 4.1Project versus nonproject activity: Commitments of bilateral ODA to the HIPCs, 1973-9970
Table 5.1Additional reduction needed for post-decision point HIPCs that are above the 2 percent threshold82
Table 5.2Cost to bring all non-decision point HIPCs below the 2 percent debt-to-GNP threshold83
Table 5.3Cost of Eurodad proposal for limiting debt service85
Table 5.4Debt indicators for potential HIPCs, 199987
Table 5.5Debt statistics for other low-income countries, 199988
Table 5.6Cost to bring all low-income countries below the 2 percent threshold for debt service to GNP and 150 percent threshold for debt to exports90
Table 5.7Hypothetical cost of contingency procedure94
Table 6.1Continued aid dependence of post-completion point HIPCs105
Table C.1Odious debt: Commitments to countries considered "Not Free" and "Corrupt"124
Table C.2Resource flows and other indicators for the Democratic Republic of Congo, 1970-99125
Table C.3Resource flows and other indicators for Kenya, 1970-99129
Table C.4Resource flows and other indicators for Nicaragua, 1970-99133
Table C.5Military and social spending by Nicaragua, 1979-99137
Table C.6Resource flows and other indicators for Pakistan, 1970-99140
Table C.7Resource flows and other indicators for Uganda, 1970-99144
Figures
Figure 2.1ODA loans to sub-Saharan Africa, 1970-9916
Figure 2.2World Bank and IMF loan disbursements to low-income countries, 1970-9917
Figure 2.3Debt ratios of HIPCs and other developing countries20
Figure 2.4Evolution of ODA disbursements from EU countries, 1980-9922
Figure 2.5Breakdown of debt by creditor, nominal debt stock, 199924
Figure 2.6Realized and projected annual growth rates, 1980-201539
Figure 3.1Ratio of NPV of debt-to-export for HIPCs at the decision point, projections, and past export trends44
Figure 3.2"Group of Eight" by Dan Wasserman45
Figure 4.1Aid to low-income countries in per capita terms, 1990-9957
Figure 4.2The increasing aid coordination challenge67
Figure 4.3Aid and debt, sub-Saharan Africa, 1977-87 and 1988-9877
Figure 5.1Cost estimates to public sector95
Figure 5.2Authors' proposals100
Boxes
Box 1.1The enhanced HIPC Initiative2
Box 2.1A short history of sovereign lending and default14
Box 2.2Debt initiatives23
Box 3.1The annual cost of achieving the Millennium Development Goals47
Box 4.1Aid accounting and debt relief56
Box 4.2The Central American Bank for Economic Integration60
Box 4.3The IMF's future role in development62
Box 4.4Aid does work--if...64
Box 6.1The PRSP challenge: Avoiding business as usual103
Box 6.2Assessing country performance: Selectivity using what measures?111

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