Debt Relief

Question 1

When did debt relief become more widespread, and through what?

Answer 1

Introduced in 1980s, but took off after HIPCs initiative in 1996.

Question 2

What did the HIPCs initiative aim to do?

Answer 2

Ensure that no poor country faced debt burdens they cannot manage.

Question 3

Name some eligible countries.

Answer 3

Mainly African, such as Chad and Sudan.

Question 4

State three actions of the HIPCs initiative.

Answer 4

1) In 2014, debt reduction packages for 36 countries (30 were African).
2) In 2005, the Multilateral Debt Relief programme developed to accelerate progress towards the MDGs, and provided 100% relief on eligible debts by the IMF, World Bank and AfDF.
3) Also in 2005, Make Poverty History campaign encouraged G8 leaders to meet, agreeing to write-off a further $40 billion of debt.

Question 5

What must countries do before getting full debt relief?

Answer 5

Complete two stage process, including demonstrating a good track record over time, lack of corruption and poverty reduction strategies.

Question 6

Strengths of the HIPCs initiative?

Answer 6

+ Provided $76 billion in debt service relief
+ Allowed most African countries to borrow again, allowing millions of children to attend schools and had lives saved by vaccinations and clinics.
+ 3/4 of African countries involved had 10 years of uninterrupted growth since 1990.
+ Countries having more cautious borrowing policies to prevent.

Question 7

Weaknesses of the HIPCs initiative?

Answer 7

• Still over $300 billion owed by African countries.
• Full debt relief only available from largest creditors eg IMF, countries may have debt from smaller creditors.
• High debt beginning to return in African countries, with Zambia spending more on debt services than education.
• Encouraged to cash crops for export, decreasing crops for domestic consumption.
• TNCs encouraged as places sold assets, leading to possibly land degradation and deforestation.