This paper analyzes the IMF’s Enhanced Initiative for Heavily Indebted Poor Countries, which provides debt relief for low-income countries. The paper highlights that countries affected by the debt crisis of the 1980s received concerted support from the international financial community in the form of Paris Club flow reschedulings, stock-of-debt operations under the Brady plan, and adjustment programs supported by the multilateral financial institutions. These measures proved effective in significantly improving the debt situation of many middle-income countries.
This paper describes the Heavily Indebted Poor Countries (HIPC) Initiative and suggests that it should enable HIPCs to exit from the debt-rescheduling process. It argues that implementation of the Initiative should eliminate debt as an impediment to economic development and growth and enable HIPC governments to focus on the difficult policies and reforms required to remove the remaining impediments to achieving sustainable development. The paper describes the implementation of the Initiative through the end of September 1998.