Achieving Long-Term Debt Sustainability in All Heavily Indebted Poor Countries (HIPCs)
February 26, 2003By Bernhard G. Gunter
Abstract: This paper builds on the emerging consensus in the development literature that the enhanced HIPC initiative does not fully remove the debt overhang in many poor and highly indebted countries. It examines the six most crucial problems of the enhanced HIPC Initiative and presents specific suggestions on how the framework of the HIPC Initiative would need to be changed in order to provide a better basis for long-term debt sustainability. However, even after the adoption of such changes, the long-term debt sustainability of HIPCs would remain fragile. The paper thus addresses some of the key issues related to a new aid architecture and the structural transformation HIPCs must undergo to achieve long-term debt sustainability.
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