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Periodical article Periodical article Leiden University catalogue Leiden University catalogue WorldCat catalogue WorldCat
Title:HIPCs' debt review of the issues
Authors:Claessens, StijnISNI
Detragiache, EnricaISNI
Kanbur, RaviISNI
Periodical:Journal of African Economies
Geographic term:Subsaharan Africa
Subject:external debt
External link:https://jae.oxfordjournals.org/content/6/2/231.full.pdf
Abstract:A group of low-income countries, referred to as the heavily indebted poor countries (HIPC), most of which are in sub-Saharan Africa, has continued to experience serious external debt serving difficulties. Creditor and debtor countries as well as international financial institutions are currently debating whether existing initiatives are sufficient te resolve the HIPCs' debt problems and, if not, which new strategies to adopt. This paper revisits the methodological issues underlying the analysis of debt sustainability, as well as the theory and empirical evidence of the effects of large debts on economic performance. It finds that (further) debt reduction for the HIPCs may only have positive effects on economic performance if it is seen as endorsing strong and effective programmes of economic stabilization and reform. This judgement will have to be made on a case-by-case basis. The paper concludes with a number of principles which should guide any practical mechanisms for debt relief: the targeting of overall debt sustainability; coordination among all creditors; a track record period sufficiently long to protect against moral hazard and to signal commitment to sound policies; and a careful, case-by-case, evaluation of the costs and benefits. Bibliogr., notes, ref., sum.