Heavily Indebted Poor Countries

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Heavily Indebted Poor Countries

The 40 least developed countries with a large amount of foreign debt. The IMF and the World Bank help heavily indebted poor countries restructure their debt by offering low interest loans and some forms of debt relief. The two organizations have offered this service since 1996.
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Debt relief has reduced financial pressures in 36 out of 39 highly indebted poor countries, and only three countries Eritrea, Somalia and Sudan have yet to start the debt-relief process.
Some of these, including the Highly Indebted Poor Countries initiative, have focused on securing debt relief for very poor countries.
According to a 1999 agreement with the IMF, signed under the auspices of a debt relief program for highly indebted poor countries, Honduras is to be forgiven about US$1 billion of its external debt over 10 years, beginning in December 2003.
On debt problems, they called on the G-8 countries to extend their debt relief programs for highly indebted poor countries to also cover other developing nations struggling with debt problems.
And the most highly indebted poor countries have significantly higher rates of infant mortality, illiteracy, malnutrition, and disease than other developing nations.
The good news is that the G8 announcement focuses attention on the economic problems of the highly indebted poor countries, but you have to understand the tradeoffs," says Peter Henry, associate professor of economics.
Compared to other donors, Korea allocates a high proportion of its aid as loans rather than grants about 40% of its total support to most countries and 18% to highly indebted poor countries.
However, the accession of a large number of these countries to the Highly Indebted Poor Countries (HIPC) initiative in recent years, including the Republic of Congo, which was granted debt relief, clearly shows that the model of external financing of deficits is not sustainable; especially if debt contracted from foreign creditors is not used productively but instead is misappropriated and finds its way to foreign banks as private assets.
Last year, at the Cologne summit of the G8 nations, reform of Highly Indebted Poor Countries was announced and by the autumn the IMF said it would be renaming its structural adjustment programme the Poverty Reduction and Growth Facility, with greater emphasis on combating poverty.
Despite a large reduction in external debt under the Highly Indebted Poor Countries (HIPC) Initiative and Multilateral Debt Relief Initiative (MDRI) in December 2007, external debt indicators suggest that The Gambia is still at high risk of debt distress.
This was alleviated by the Highly Indebted Poor Countries Initiative--dreamt-up and administered by those very same BWIs that did so much damage in the first place
He said he was sure that G7 countries would fulfil a pledge to radically reform the so-called Highly Indebted Poor Countries debt relief initiative by the time of their summit in the German city of Cologne in June.

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