## 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](https://www.imf.org/en/publications/wp/issues/2016/12/30/debt-relief-additionality-and-aid-allocation-in-low-income-countries-16756)

## Other formats

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

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### 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

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## Content in this bundle

- **Debt Relief, Additionality, and Aid Allocation in Low-Income Countries - WP/03/175**
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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/30/debt-relief-additionality-and-aid-allocation-in-low-income-countries-16756_