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Reducing the Debt of the Poorest: Challenges and Opportunities

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Reducing the Debt of the Poorest: Challenges and Opportunities

Published: November 19, 1999

This paper attempts to put current debt reduction efforts into perspective by explicitly addressing the opportunities and complications of debt relief for the poorest countries. The aim is to help current attempts at debt relief become more cognizant of both the opportunities and limitations of debt relief, particularly in the context of wider global efforts at poverty reduction and continued human development in the developing world.

These issues are addressed in three sections. Section one deals with the developing-country cost of heavy debt burdens—the cost in terms of foregone human development. The second section addresses the mechanics of debt relief, the options for structuring debt relief, potential instruments, and the role and nature of conditionality. Section three deals with the creditor costs of debt relief and the potential conflict between debt relief and ODA. The paper ends with a summary of the issues raised and a discussion of the direction of future research.

Author: John E. Serieux

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