Delivering on Debt Relief

Publication Info

Publication Type

• Briefs

Download

• Download (PDF, 86 KB)

Initiative

• Globalization and Inequality

Research Topics

• Aid Effectiveness
• Capital Flows/Financial Crises
• Debt Relief
• Economic Growth
• Inequality
• International Financial Institutions
• Poverty
• Regions

CGD Expert

• Nancy Birdsall

Articles

• A New Financial Crisis around the World (Congressional Quarterly)
• Q & A: Nigerian Debt Relief
• Chance to Break Free from Cycle of Debt (Financial Times)

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Nancy Birdsall and Brian Deese

04/01/2002

Over the last several years, the United States and other major donor countries have supported a historic initiative to write down the official debts of a group of heavily indebted poor countries, or HIPCs. Donor countries had two primary goals in supporting debt relief: to reduce countries' debt burdens to levels that would allow them to achieve sustainable growth; and to promote a new way of assisting poor countries focused on home-grown poverty alleviation and human development. While the current "enhanced HIPC" program of debt relief is more ambitious than any previous initiative, it will fall short of meeting these goals. We propose expanding the HIPC program to include all low-income countries and increasing the resources dedicated to debt relief. Because debt relief will still only be a first step, we also recommend reforms of the current "aid architecture" that will make debt more predictably sustainable, make aid more efficient, and help recipient countries graduate from aid dependence.