PostHIPC Debt Sustainability and Commonwealth HIPCs

image of PostHIPC Debt Sustainability and Commonwealth HIPCs
The debt problem facing poor countries has been at the heart of Commonwealth concerns since the 1980s. The Heavily Indebted Poor Countries (HIPC) Initiative has made important strides in providing comprehensive debt relief to the world’s poorest, most heavily indebted countries, cutting the total external debt of 26 out of the 42 eligible countries by twothirds.

The report presents discussions held at the 2003 Dar es Salaam HIPC Ministerial Forum and calls for a number of actions to deal with both immediate concerns and the issues surrounding longterm debt sustainability in HIPCs.



New Borrowing, Terms of Donor Finance and External Debt Management

In addition to ensuring improvements in a country's repayment capacity through overall macroeconomic and structural policies, as well as specific export and revenue raising policies, long-term debt sustainability requires attention to strengthened debt management, including prudent policies on new borrowing. Regardless of their export performance, there are a number of key principles that HIPCs will need to follow to improve their debt sustainability prospects. These include limiting or avoiding non-concessional borrowing; integrating plans for new borrowing with the broader macroeconomic and fiscal framework; tailoring new borrowing to a country's debt servicing capacity; following best practices in debt management; and ensuring that borrowed funds are used productively to assure sufficient returns to repay future obligations.


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