“This paper analyzes the Heavily Indebted Poor Countries’ Initiative (HIPC) with a focus on the experiences of countries such as Uganda and Bolivia that have had the most experience with the program. It was written at a time when Ghana was considering the relative merits of being a party to the Initiative. The HIPC Initiative has fuelled considerable debate regarding the extent to which it can contribute to a meaningful reduction in the debt of developing countries. One aspect of the debate has focused on the need for total debt cancellation as opposed to sustainable debt reduction. Proponents of debt cancellation argue that mere debt reduction cannot bring lasting relief from the yoke of indebtedness; the creditor countries on their part have resisted such calls largely on financial grounds. Another aspect of the debate takes debt reduction as a point of departure but then questions the criteria for determining the optimum amount of debt reduction required to bring “sustainable relief.””
