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Debt Relief, Additionality, and Aid Allocation in Low Income Countries

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  • Robert Powell

Abstract

This paper models the resource implications of debt relief provided to low-income countries (LICs). Obtaining debt relief does not necessarily lead to individual aid-dependent countries receiving more overall resources from the donor community. Preliminary cross-section estimates suggest that debt relief provided to low-income countries in the period 1996 2000 neither crowded out other non-debt relief-related aid flows to the debtors concerned nor created significant extra net resources for those countries. While it is too early to fully assess the resource implications of the enhanced HIPC Initiative, this paper provides a possible approach to such an evaluation.

Suggested Citation

  • Robert Powell, 2003. "Debt Relief, Additionality, and Aid Allocation in Low Income Countries," IMF Working Papers 03/175, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:03/175
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    References listed on IDEAS

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    5. Kevin Ross & R. Brooks & Robert Powell & Ydahlia A. Metzgen Quemarez & Doris C Ross & Mariano Cortes & Saqib Rizavi & Benoit Ketchekmen & Francesca Fornasari, 1998. "External Debt Histories of Ten Low-Income Developing Countries; Lessons from Their Experience," IMF Working Papers 98/72, International Monetary Fund.
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    11. Hjertholm, Peter, 2001. "Debt Relief and the Rule of Thumb: Analytical History of HIPC Debt Sustainability Targets," WIDER Working Paper Series 068, World Institute for Development Economic Research (UNU-WIDER).
    12. Wall, Howard J., 1995. "The allocation of official development assistance," Journal of Policy Modeling, Elsevier, vol. 17(3), pages 307-314, June.
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    Cited by:

    1. Johansson, Pernilla, 2008. "Debt Relief, Investment and Growth," Working Papers 2008:11, Lund University, Department of Economics.
    2. Daniel Cohen & Pierre Jacquet & Helmut Reisen, 2007. "Loans or Grants?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 143(4), pages 764-782, December.
    3. HEPP, Ralf, 2010. "CONSEQUENCES OF DEBT RELIEF INITIATIVES IN THE 1990s," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 10(1).
    4. Graham Bird & Dane Rowlands, 2007. "The IMF and the mobilisation of foreign aid," Journal of Development Studies, Taylor & Francis Journals, vol. 43(5), pages 856-870.
    5. Jie Yang & Dan Nyberg, 2009. "External Debt Sustainability in HIPC Completion Point Countries; An Update," IMF Working Papers 09/128, International Monetary Fund.
    6. Heylen, Fanny, 2010. "Analyzing the poverty impact of the enhanced Heavily Indebted Poor Countries (HIPC) initiative in Bolivia," Documentos de trabajo 1/2010, Instituto de Investigaciones Socio-Económicas (IISEC), Universidad Católica Boliviana.
    7. Sandra Marcelino & Ivetta Hakobyan, 2014. "Does Lower Debt Buy Higher Growth? The Impact of Debt Relief Initiatives on Growth," IMF Working Papers 14/230, International Monetary Fund.

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