Paper Topic:

Economics- Debt Relief

Domestic Implications of Debt Relief

TABLE OF CONTENTS

TITLE PAGE

Chapter One - Introduction .1

Chapter Two - Role of World Bank and IMF .13

Challenges and future policies .18

Chapter Three - Diagnosis and Reflections on Poverty Reduction Policies (Africa Developing Regions .23

Diagnosis and Reflections on Poverty Reduction Policies (Africa Developing Regions ) 23

Poverty and recession in sub-Saharan Africa .24

Africa deprived of its inheritance .24

The urban dynamics : cities suffer most .29

Recession and poverty : case studies .36 p

Chapter Four - Conclusion and Recommendations .37

Policy design post evaluation .37

Conclusions .43

Resources .44

LIST OF TABLES

Table 1 . Characteristics of the debt pro of developing countries .5

Table 2 . Comparative performances of sub-Saharan Africa and other developing regions .25

Table 3 . Development indicators in various African cities .32 Chapter One

Introduction

In recent years , the external debt situation for a number of low-income countries has become extremely difficult , prompting the IMF and the World Bank to design a framework in 1996 to provide special assistance to the heavily indebted poor countries (HIPC . There are 41 HIPCs including 31 HIPC-LeDCs , which meet the three criteria to qualify for the enhanced initiative . These criteria are (i ) a country is only eligible for highly concessional assistance (IDA (ii ) it has an IMF poverty reduction and growth facility supported-programme (PRGF ) in place and (iii ) it has agreed to a rescheduling of debts on concessional terms with the Paris Club . According to the UNDP , the most impoverished and vulnerable countries of the world are grouped under the category of `least developed countries (LeDCs . Most , but not all LeDCs are heavily indebted . Furthermore , there are some heavily indebted countries that do not belong to the LeDC category . A country is designated as a least developed country if it meets inclusion thresholds on the following three criteria (African Development Bank 2005

1 A low income : income to be below a GDP per capita of US 800

2 Weak human resources , measured by the Augmented Physical Quality of Life Index , which is based on indicators of life expectancy at birth per capita calorie intake , combined primary and secondary school enrolment , and adult literacy

3 A low level of economic diversification , measured by the Economic Diversification Index , which is based on the share of manufacturing in GDP . The share of the labour force in industry , annual per capita commercial energy consumption and UNCTAD 's merchandise export concentration index

The classification of HIPCs seems to be based on a rule of thumb rather than on clear-cut quantitative criteria . In 1996 , when the category was introduced , the group of HIPCs consisted of 32 severely indebted low-income countries and nine other countries . To be classified as severely indebted in 1996 a country should have had

1 Present value of debt service to GDP to exceed 80 per cent , or

2 Present value of debt to exports to exceed 220 per cent (UNCTAD 2002

Two other common denominators of this group are that the countries only borrow on highly concessional terms from the...

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