This book deals with the recent debt crises in developing countries and analyzes the design and implementation of the Heavily Indebted Poor Countries (HIPC) Initiative, by providing background concepts, pointing out the main drawbacks and suggesting a different approach to debt sustainability and debt relief programs. The authors merge academic, operational and institutional expertise, in order to provide an evaluation as complete and balanced as possible on the much-debated effectiveness of debt relief in fostering economic growth, reducing poverty and reaching debt sustainability. Marco Arnone and Andrea F. Presbitero assess the joint evolution of external and domestic public debt and produce original empirical evidence on the potential effects of public debt on investment, economic growth and institution-building in low- and middle-income countries. The book also explores relevant and up-to-date policy issues, such as the loans-grants mix and the development of responsible lending strategies in foreign assistance, the surge of non-concessional and domestic borrowing by low-income countries, and the impact of the 2008-2009 global financial crisis on debt sustainability.
About the Author
Marco Arnone, Centre for Macroeconomics and Finance Research (CeMaFiR) and Catholic University of Milan, Italy and Andrea F. Presbitero, Centre for Macroeconomics and Finance Research (CeMaFiR), Money and Finance Research group (MoFiR), and Universitã Politecnica delle Marche, Italy
Table of Contents
Contents: Foreword, Nancy Birdsall; Preface, Ugo Panizza; Introduction; Part 1 Multilateral Initiatives and External Debt Sustainability: Overview; The Heavily Indebted Poor Countries and the Multilateral Debt Relief initiatives: description and issues; External debt sustainability: theory, approaches and limitations. Part 2 HIPCS/LICS and Macroeconomic Management: the Role of Domestic Debt: Overview; Domestic debt in developing countries; The relevance of domestic debt in HIPCs; Domestic debt and debt sustainability. Part 3 External Debt a3nd Macroeconomic Performance: Overview; External debt and growth: mixed evidence; External debt and growth: an empirical investigation; An ex-post evaluation of debt relief. Part 4 The Challenges Ahead: Overview; The global economic and financial crisis and the HIPCs; Some proposals for a comprehensive approach to debt sustainability and debt relief; Afterword, Aart Kraay; Bibliography; Index.