Hiccups for HIPCs?

Craig Burnside () and Domenico Fanizza

No 10903, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In this paper we discuss fiscal and monetary policy issues facing heavily-indebted poor countries (HIPCs) who receive debt reduction via the enhanced HIPC initiative. This debt relief program is distinguished from previous ones by its conditionality: freed resources must be used for poverty reduction. We argue that (i) this conditionality severely limits the extent to which the initiative provides significant debt relief; (ii) depending on the response of monetary policy to an increase in social spending there could be a short-run increase in inflation in HIPC countries and (iii) the keys to long-run fiscal sustainability in the HIPCs are significant fiscal reforms by their governments, and the effectiveness of their poverty reduction programs in raising growth.

JEL-codes: E31 H63 O11 O23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-afr and nep-dev
Date: 2004-11
Note: EFG IFM
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Related works:
Working Paper: Hiccups for HIPCs? (2001)
Working Paper: Hiccups for HIPCs (2003)
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