From Toronto Terms to the HIPC Initiative: A Brief History of Debt Relief for Low-Income Countries

Christina Daseking and Robert Powell

No 1999/142, IMF Working Papers from International Monetary Fund

Abstract: The low-income country debt crisis had its origins in weak macroeconomic policies, and official creditors’ willingness to take risks unacceptable to private lenders. Payments problems were initially addressed through nonconcessional reschedulings and new lending that maximized financing while containing the budgetary costs for creditors. This led to an unsustainable buildup in debt stocks. More recently, debt ratios have improved, reflecting both adjustment and substantial debt relief. The paper estimates debt relief initiatives since 1988 have cost creditors at least $30 billion, and possibly much more. This compares with the estimated costs of about $27 billion under the enhanced HIPC Initiative.

Keywords: WP; debt forgiveness; reduction option; cash flow; discount rate; External Debt; HIPCs; Low-Income Countries; Paris LIC Paris Club; debt reduction; present value; PV reduction; Debt relief; Debt reduction; Debt rescheduling; Debt service; Stocks; Global (search for similar items in EconPapers)
Pages: 29
Date: 1999-10-01
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Citations: View citations in EconPapers (36)

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