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Prospective aid and indebtedness relief: a proposal

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  • BERLAGE, Lodewijk
  • CASSIMON, Danny
  • DRÈZE, Jacques
  • REDING, Paul
Abstract
Primary needs of human development are not met in poor development countries.Although ambitious goals have been set by the international community to meet specific human development targets by 2015, Official Development Aid is lagging and excessive external debt continues to drain much needed resources from poor countries despite the recent HIPC (Highly Indebted Poor Countries)Initiative. This paper outlines a 15-year program for implementing the 2015 Human Development targets while resolving fully the debt overhang problem for a set of 49 poor countries. The proposal requires additional contributions from 23rich countries amounting to 0.1 of 1% of their GDP over each of the 15y ears. Although only a small part of the effort would take the form of debt cancellation, the outstanding debt of the 49 poor countries would be totally extinct by year 2015. The program, to be implemented in a multilateral framework in which all interested parties have an effective voice, relies on several basic premises: a long term commitment by donors; a fair burden sharing among creditors; a fair distribution of newly available resources among poor countries, heavily indebted or not; a targeting of these resources to human development programs; a conditionality guaranteeing reasonable aid effectiveness.
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Suggested Citation

  • BERLAGE, Lodewijk & CASSIMON, Danny & DRÈZE, Jacques & REDING, Paul, 2003. "Prospective aid and indebtedness relief: a proposal," LIDAM Reprints CORE 1660, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvrp:1660
    DOI: 10.1016/S0305-750X(03)00142-6
    Note: In : World Development, 31(10), 1635-1654, 2003
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    Cited by:

    1. Gianni Vaggi & Luca Frigerio, 2021. "Foreign debt sustainability and human development in Sub Saharan Africa," DEM Working Papers Series 203, University of Pavia, Department of Economics and Management.
    2. Joanna Gravier-Rymaszewska, 2012. "How Aid Supply Responds to Economic Crises: A Panel VAR Approach," WIDER Working Paper Series wp-2012-025, World Institute for Development Economic Research (UNU-WIDER).
    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. Salem Kanoun, 2012. "Linkages Between Fiscal Debt Sustainability, Growth And Poverty: An Application To Tunisia," Book Chapters, in: João Sousa Andrade & Marta C. N. Simões & Ivan Stosic & Dejan Eric & Hasan Hanic (ed.), Managing Structural Changes - Trends and Requirements, edition 1, volume 1, chapter 12, pages 214-249, Institute of Economic Sciences.
    5. repec:unu:wpaper:wp2012-25 is not listed on IDEAS
    6. Anubha Dhasmana, 2008. "Welfare Gains of Aid Indexation in Small Open Economies," IMF Working Papers 2008/101, International Monetary Fund.
    7. Tito Cordella & Giovanni Dell'Aricca, 2002. "Limits of Conditionality in Poverty Reduction Programs," IMF Staff Papers, Palgrave Macmillan, vol. 49(Special i), pages 68-86.
    8. Heylen, Fanny Heylen, 2010. "Analyzing the Poverty Impact of the Enhanced Heavily Indebted Poor Countries (HIPC) Initiative in Bolivia," Revista Latinoamericana de Desarrollo Economico, Carrera de Economía de la Universidad Católica Boliviana (UCB) "San Pablo", issue 14, pages 71-106.
    9. Ugo PANIZZA, 2015. "Debt Sustainability in Low-Income Countries - The Grants versus Loans Debate in a World without Crystal Balls," Working Papers P120, FERDI.
    10. Birdsall, Nancy & Diwan, Ishac & Claessens, Stijn, 2002. "Will HIPC Matter? The Debt Game and Donor Behaviour in Africa," CEPR Discussion Papers 3297, C.E.P.R. Discussion Papers.
    11. Danny Cassimon & Karel Verbeke & Dennis Essers, 2017. "The IMF-WB Debt Sustainability Framework: Procedures, Applications and Criticisms," Development Finance Agenda, Chartered Institute of Development Finance, vol. 3(1), pages 4-6.
    12. Cassimon, Danny & Vaessen, Jos, 2007. "Theory, practice and potential of debt for development swaps in the Asian and Pacific region," Economic Systems, Elsevier, vol. 31(1), pages 12-34, March.
    13. Schweickart, David, 2007. "Debt and Deception," Business Ethics Quarterly, Cambridge University Press, vol. 17(1), pages 147-161, January.
    14. John Geanakoplos & Felix Kubler, 2003. "Dollar Denominated Debt and Optimal Security Design," Cowles Foundation Discussion Papers 1449, Cowles Foundation for Research in Economics, Yale University.
    15. Bernhard G. Gunter & A. F. M. Ataur Rahman, 2008. "Analyzing Bangladesh’s Debt Sustainability Using SimSIP Debt," Bangladesh Development Research Working Paper Series (BDRWPS) BDRWPS No. 2, Bangladesh Development Research Center (BDRC).
    16. Danny Cassimon & Bjorn Van Campenhout, 2008. "Comparative Fiscal Response Effects Of Debt Relief: An Application To African Hipcs," South African Journal of Economics, Economic Society of South Africa, vol. 76(3), pages 427-442, September.
    17. Gravier-Rymaszewska, Joanna, 2012. "How Aid Supply Responds to Economic Crises: A Panel VAR Approach," WIDER Working Paper Series 025, World Institute for Development Economic Research (UNU-WIDER).
    18. Cassimon, Denis & Moreno-Dodson, Blanca & Wodon, Quentin, 2008. "Debt Sustainability for Low-Income Countries: A Review of Standard and Alternative Concepts," MPRA Paper 11077, University Library of Munich, Germany.

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