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Ms. Christina Daseking and Mr. Robert Powell

350 percent of exports may receive a 50 percent level of concessionality decided on a case-by-case basis. For a 50 percent level of concessionality, terms are equal to London terms, except for the debt-service-reduction option under a stock-of-debt operation that includes a three-year grace period. 3/ These terms are to be granted in the context of concerted action by all creditors under the HIPC Initiative. They also include, on a voluntary basis, an ODA debt-reduction option. 4/ Fourteen years before June 1992. 5/ Interest rates are based on

John Clark and Mr. Eliot Kalter

market-based debt and debt service reduction options. The main condition for this support was that the debtor be implementing a strong set of adjustment and reform policies that, combined with debt operations, would provide for substantial progress toward external viability. Under this approach, banks can choose among a range of options previously agreed between the borrower and a committee of the country’s leading bank creditors. Among the options, buybacks have allowed banks to exit by selling their claims back to the borrower at a discount. Under more complex bond

Ms. Christina Daseking and Mr. Robert Powell
The low-income country debt crisis had its origins in weak macroeconomic policies, and official creditors’ willingness to take risks unacceptable to private lenders. Payments problems were initially addressed through nonconcessional reschedulings and new lending that maximized financing while containing the budgetary costs for creditors. This led to an unsustainable buildup in debt stocks. More recently, debt ratios have improved, reflecting both adjustment and substantial debt relief. The paper estimates debt relief initiatives since 1988 have cost creditors at least $30 billion, and possibly much more. This compares with the estimated costs of about $27 billion under the enhanced HIPC Initiative.