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The HIPC Initiative: True and False Promises


  • Daniel Cohen


The paper develops the view that the perspective on the HIPC initiative is distorted by the fact that -contrary to the Brady deal itself- it lacks all perspective on the “market value” of the debt which is written down. The appropriate “market value” is one that takes account of the risk of non-payment: arrears, rescheduling and “constrained” refinancing of various sorts. Building upon econometric evidence that relies on middle income debtors in the eighties, the paper argues that the initiative is about ten times less generous than face value accounting would suggest ... Selon ce Document technique, l’évaluation de l'initiative PPTE (Pays Pauvres Très Endettés) est faussée par le fait que — contrairement à l'accord Brady — elle ne prend pas en compte la “valeur de marché” de la remise de dette. La “valeur de marché” exacte est celle qui intègre le risque de non-paiement : arriérés, rééchelonnements et refinancements “contraints” de différentes natures.A partir d'une analyse économétrique des débiteurs à revenu intermédiaire des années 80, le document affirme que l'initiative est à peu près dix fois moins généreuse que ce que pourrait laisser penser sa valeur faciale comptable ...

Suggested Citation

  • Daniel Cohen, 2000. "The HIPC Initiative: True and False Promises," OECD Development Centre Working Papers 166, OECD Publishing.
  • Handle: RePEc:oec:devaaa:166-en
    DOI: 10.1787/333105728152

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    Cited by:

    1. 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.
    2. Johansson, Pernilla, 2008. "Debt Relief, Investment and Growth," Working Papers 2008:11, Lund University, Department of Economics.
    3. Daniel Cohen & Richard Portes, 2004. "Dealing with Destabilizing 'Market Discipline'," NBER Working Papers 10533, National Bureau of Economic Research, Inc.
    4. repec:bep:maccon:v:5:y:2005:i:1:p:1133-1133 is not listed on IDEAS
    5. Miguel Messmacher & Mark Kruger, 2004. "Sovereign Debt Defaults and Financing Needs," IMF Working Papers 04/53, International Monetary Fund.
    6. 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).
    7. Marine De Talancé & Marin Ferry & Miguel Niño-Zarazùa, 2019. "Did Debt Relief Initiatives help to reach the MDGs? A Focus on Primary Education," Erudite Working Paper 2019-23, Erudite.
    8. Andy Haldane & Mark Kruger, 2002. "The Resolution of International Financial Crises: Private Finance and Public Funds," Bank of Canada Review, Bank of Canada, vol. 2001(Winter), pages 3-13.
    9. Daniela López, 2003. "Assessing Bolivia´s debt relief under the heavily, indebted poor countries initiative," Revista de Análisis del BCB, Banco Central de Bolivia, vol. 6(2-1), pages 89-138, December.
    10. Marin Ferry & Marc Raffinot, 2019. "Curse or Blessing? Has the Impact of Debt Relief Lived up to Expectations? A Review of the Effects of the Multilateral Debt Relief Initiatives for Low-Income Countries," Journal of Development Studies, Taylor & Francis Journals, vol. 55(9), pages 1867-1891, September.
    11. Craig Burnside & Domenico Fanizza, 2001. "Hiccups for HIPCs?," WIDER Working Paper Series DP2001-99, World Institute for Development Economic Research (UNU-WIDER).
    12. Alessandro Missale & Silvia Marchesi, 2004. "What does motivate lending and aid to the HIPCs?," International Finance 0411006, University Library of Munich, Germany.
    13. Peter Nunnenkamp & Peter Wahl & Thomas Wollenzien, 2001. "Was bringt das Entschuldungsprogramm für hochverschuldete arme Länder?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 54(01), pages 06-14, March.
    14. Peter Nunnenkamp & Peter Wahl & Thomas Wollenzien, 2001. "Was bringt das Entschuldungsprogramm für hochverschuldete arme Länder?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 54(01), pages 03-14, March.
    15. European Network on Development, 2001. "Debt Reduction for Poverty Eradication in the Least Developed Countries: Analysis and Recommendations on LDC Debt," WIDER Working Paper Series DP2001-110, World Institute for Development Economic Research (UNU-WIDER).
    16. Ralf Hepp, 2005. "Can Debt Relief Buy Growth?," International Finance 0510003, University Library of Munich, Germany.
    17. Ralf Hepp, 2005. "Health Expenditures Under the HIPC Debt Initiative," International Finance 0510005, University Library of Munich, Germany.
    18. Neumayer, Eric, 2002. "Is Good Governance Rewarded? A Cross-national Analysis of Debt Forgiveness," World Development, Elsevier, vol. 30(6), pages 913-930, June.
    19. Jean-Claude Berthélemy, 2001. "HIPC Debt Relief and Policy Reform Incentives," WIDER Working Paper Series DP2001-105, World Institute for Development Economic Research (UNU-WIDER).
    20. repec:bpj:bejmac:v:5:y:2005:i:1:p:1133-1133 is not listed on IDEAS
    21. Johansson, Pernilla, 2010. "Debt Relief, Investment and Growth," World Development, Elsevier, vol. 38(9), pages 1204-1216, September.
    22. Nadir Altinok, 2003. "La Banque mondiale et l'éducation en Afrique subsaharienne," Post-Print hal-02052310, HAL.
    23. Marc Raffinot, 2006. "Prêts ou dons. Commentaires," Revue d’économie du développement, De Boeck Université, vol. 14(2), pages 159-165.
    24. repec:dau:papers:123456789/10905 is not listed on IDEAS

    More about this item

    JEL classification:

    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies


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