Debt Relief, Additionality, and Aid Allocation in Low Income Countries

IMF Working Papers, September 1, 2003

Source details

Canonical URL

Debt Relief, Additionality, and Aid Allocation in Low Income Countries

Other formats

• Markdown version
• Structured JSON version
• Bundle manifest

Bibliographic details

• Authors: Robert Powell
• Published: September 1, 2003
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9781451858778.001

Summary

• This paper models the resource implications of debt relief provided to low-income countries (LICs).
• Obtaining debt relief does not necessarily lead to individual aid-dependent countries receiving more overall resources from the donor community.
• Preliminary cross-section estimates suggest that debt relief provided to low-income countries in the period 1996 2000 neither crowded out other non-debt relief-related aid flows to the debtors concerned nor created significant extra net resources for those countries.
• While it is too early to fully assess the resource implications of the enhanced HIPC Initiative, this paper provides a possible approach to such an evaluation.

Key Findings

• Debt relief does not automatically translate into larger overall resource inflows to individual aid-dependent LICs.
• Empirical evidence from cross-section estimates for the period 1996 2000 indicates:
  • No detectable crowding out of other non-debt-relief-related aid flows to debtors that received debt relief.
  • No significant creation of extra net resources for those recipient countries over that period.

Scope and Approach

• Focus: resource implications of debt relief provided to low-income countries.
• Method: modeling resource implications and preliminary cross-section empirical estimates.
• Application: provides an approach that may be used to evaluate the enhanced HIPC Initiative when sufficient data are available.

Subjects and Keywords

• Subjects: Aid flows, Asset and liability management, Debt reduction, Debt relief, Debt service payments, External debt, Foreign aid
• Keywords: ability to pay, additionality, aid, Aid flows, aid receipt, aid-disbursement decision, debt forgiveness, Debt reduction, debt relief, Debt service payments, debt-relief initiative, Global, HIPCs, low-income countries, ODA flow, recipient country, resource transfer, WP

Content in this bundle

• Debt Relief, Additionality, and Aid Allocation in Low-Income Countries - WP/03/175
  • Debt Relief, Additionality, and Aid Allocation in Low-Income Countries - WP/03/175 (Markdown version)
  • Debt Relief, Additionality, and Aid Allocation in Low-Income Countries - WP/03/175 (PDF)