PHA-Exchange> IMF Says Debt-Relief Initiative For Africa Not Working

[Claudio]

From: "Dr Rana Jawad Asghar" <jawad at alumni.washington.edu>
>  
> IMF Says Debt-Relief Initiative For Africa Not Working

> The International Monetary Fund's initiative for Heavily Indebted 
> Poor Countries, launched in 1996 to reduce debt levels in some of 
> Africa's poorest countries so they can increase spending on basic 
> services such as education and health, is not working, IMF re-
> searchers say in a report released Monday.
>  
> According to Fiscal Sustainability in African HIPC Countries: A 
> Policy Dilemma?, which analyzes the economic performance of 12 
> African countries, including Mozambique, Tanzania, Ghana, and 
> Cameroon, African governments have not been able to raise enough 
> money to invest in social programs even after having their debts 
> reduced.
>  
> "As countries made progress in macroeconomic stabilization they 
> are now 'allowed' to increase their expenditure to address pov-
> erty-reduction needs," the report says. "However, based on our 
> framework, this may result in the country's swinging back into 
> unsustainable debt levels."
>  
> The report says that those countries will only be able to achieve 
> sustainable economic growth if they raise taxes or receive more 
> foreign aid. The latter, however, is likely to cause an increase 
> in foreign debt, it says (Martin Plaut, BBC Online, Oct. 21). 
> http://www.unwire.org/UNWire/20031022/449_9672.asp
>  
> Full Report in Adobe PDF format (27 pp. 988 kB) at:
> http://www.imf.org/external/pubs/ft/wp/2003/wp03187.pdf
>  
>