Achieving Long-Term Debt Sustainability in All Heavily
Indebted Poor Countries (HIPCs)
Bernhard G. Gunter
*
Discussion Paper prepared for the
Intergovernmental Group of 24 (G-24)
XVI Technical Group Meeting in Trinidad and Tobago
February 13-14, 2003
Final version, February 26, 2003
Abstract:
This paper builds on the emerging consensus in the development literature that the
enhanced HIPC initiative does not fully remove the debt overhang in many poor and
highly indebted countries. It examines the six most crucial problems of the enhanced
HIPC Initiative and presents specific suggestions on how the framework of the HIPC
Initiative would need to be changed in order to provide a better basis for long-term debt
sustainability. However, even after the adoption of such changes, the long-term debt
sustainability of HIPCs would remain fragile. The paper thus addresses some of the key
issues related to a new aid architecture and the structural transformation HIPCs must
undergo to achieve long-term debt sustainability.
____________________
* The author is an independent consultant, specializing on issues related to development macroeconomics,
poverty, and debt, currently associated with the New Rules for Global Finance Coalition, the International
Labor Office, and the World Bank. He previously was an Economist in the World Bank’s HIPC unit (1998-
2000) and a Consultant for the World Bank Institute (1995-1998). The views expressed here are those of
the author and should not be associated to any institution. Without implicating, the author expresses thanks
for valuable comments received from Ariel Buira, Nisreen Farhan, Barry Herman, Rajapakse Jayatissa,
Patience Kunene, Aziz Ali Mohammed, Damian Ondo Mane, Henry Northover, Cristian Ossa, and Benu
Schneider. For communications, please contact
Bernhardgunter@earthlink.net
.