Search Results

Helping the Poor to Help Themselves: Debt Relief or Aid?

Serkan Arslanalp and Peter Blair Henry

in Sovereign Debt at the Crossroads: Challenges and Proposals for Resolving the Third World Debt Crisis

This chapter discusses the central economic question of debt relief: does debt relief work to promote economic growth? This seemingly straightforward question — often taken for granted by debt ... More

This chapter discusses the central economic question of debt relief: does debt relief work to promote economic growth? This seemingly straightforward question — often taken for granted by debt campaigners — merits closer attention to ensure that relief bears constructive and sustainable outcomes. It is argued that debt relief is highly effective at promoting growth in countries suffering from a “debt overhang”, where reducing debt levels will stimulate investment and net resource transfers from abroad, but less effective in countries where infrastructure is weak and where net resource transfers are already positive.Less

Dealing Comprehensively, and Justly, with Sovereign Debt

Jack Boorman

in Sovereign Debt at the Crossroads: Challenges and Proposals for Resolving the Third World Debt Crisis

This chapter discusses ideas for resolving debt crises. It argues that a narrow focus on debt relief in HIPCs is insufficient and that the activist community and lenders must look to finding broader ... More

This chapter discusses ideas for resolving debt crises. It argues that a narrow focus on debt relief in HIPCs is insufficient and that the activist community and lenders must look to finding broader measures of foreign aid and creating a fair trading environment. In the end, finding the “right” level of debt relief is impossible and ignores the more important aim of delivering a better life to impoverished people. Support is given to a proposal floated by the IMF for a sovereign debt restructuring mechanism (SDRM) to resolve pending debt crises in developing countries.Less

The Legal Case for Debt Repudiation

Chris Jochnick

in Sovereign Debt at the Crossroads: Challenges and Proposals for Resolving the Third World Debt Crisis

This chapter briefly describes the tremendous social and economic costs of overindebtedness and the role of Northern creditors and governments in solving debt problems. It then sets forth legal ... More

This chapter briefly describes the tremendous social and economic costs of overindebtedness and the role of Northern creditors and governments in solving debt problems. It then sets forth legal reasons for the need for debt repudiation and/or relief: (1) the heightened level of responsibility of creditors and Northern governments; (2) violations of human rights, and (3) the illegitimacy of debt. These arguments are based on well-established principles of domestic and international law that are applicable to domestic proceedings and relevant to a future international insolvency mechanism. The arguments serve to challenge popular or political understandings of the legal sanctity of debt, thereby creating space and support for more ambitious solutions to debt crises.Less

The Jubilee 2000 Campaign: A Brief Overview

Ann Pettifor

in Sovereign Debt at the Crossroads: Challenges and Proposals for Resolving the Third World Debt Crisis

This chapter describes what is perhaps the most powerful innovation for achieving debt relief for the poor since the mid-1990s: the mobilization of civil societies. The Jubilee 2000 movement was ... More

This chapter describes what is perhaps the most powerful innovation for achieving debt relief for the poor since the mid-1990s: the mobilization of civil societies. The Jubilee 2000 movement was extraordinary — uniting tens of millions of people and spanning nations and continents — all in the name of reducing the burden of developing-country debt. The movement's history and analysis of its successes and failures underscores the importance of civil society groups in the debate over debt and their potential role in promoting and implementing solutions.Less

International Borrowing

RUMU SARKAR

in International Development Law: Rule of Law, Human Rights, and Global Finance

This chapter explains the international financial architecture supporting the financing of international development. It examines the international borrowing practices of sovereign states, and ... More

This chapter explains the international financial architecture supporting the financing of international development. It examines the international borrowing practices of sovereign states, and analyzes two case studies of the Mexican and Asian financial crises. These sovereign debt crises are examined from the standpoint of strategic and tactical approaches to resolving them, and preventing financial contagion in the future. The current global financial contagion, originating in the United States, and its impact on developing countries, is reviewed from a “lessons learned” perspective. Tactical approaches to resolving sovereign debt crises such as debt-for-debt exchanges, debt-equity swaps, debt securitization, credit facilities, and special financing techniques are critically reviewed. Finally, debt relief as a development strategy is critically examined. Explanatory text boxes and other graphics are provided to assist the reader absorb a complex area of law.Less

Ethiopian Debt Policy: The Long Road from Paris Club to the MDGs

Matthew Martin

in Overcoming Developing Country Debt Crises

This chapter takes us through the revealing case in point of how Ethiopia's debt burden was lifted. It traces the laborious process that the government underwent in eight separate debt renegotiation ... More

This chapter takes us through the revealing case in point of how Ethiopia's debt burden was lifted. It traces the laborious process that the government underwent in eight separate debt renegotiation rounds in the Club from 1992 to 2004, four of them before the HIPC Initiative was launched and four as part of the Initiative. The final decision on HIPC relief for Ethiopia was then followed by a further reduction in debt under the MDRI, which cancelled almost all of Ethiopia's remaining external debt. Within the context of the donors' slow recognition of the need for deeper relief, the chapter emphasizes how important it was that the Ethiopian debt management team gained the capacity and confidence to independently make its own debt sustainability assessments. Ethiopia thus became better able to advocate for itself in negotiations in the Bretton Woods institutions and with its government creditors on how much relief it required.Less

Debt Management and Debt Relief 1

Damoni Kitabire

in Uganda's Economic Reforms: Insider Accounts

This chapter shows how the rapid accumulation of debt from 1986 led to a debt crisis in 1990. It discusses the debt management strategies adopted following the crisis to ensure that it would not ... More

This chapter shows how the rapid accumulation of debt from 1986 led to a debt crisis in 1990. It discusses the debt management strategies adopted following the crisis to ensure that it would not recur. Paris Club rescheduling and commercial debt buy‐back helped reduce the stock of arrears. However, this increased the share of multilateral debt, which could not be rescheduled, to 75%. Uganda was in the vanguard of the debt relief movement of the 1990s, which culminated in the Highly Indebted Poor Countries initiative, and was the first country to benefit from HIPC. This chapter shows how sound economic management and a strong commitment to poverty reduction underpinned the case for multilateral debt relief in a country where debt was vividly crowding out social expenditure. It also looks at Uganda's role in the HIPC initiative and shows the impact of debt relief on debt service costs.Less

Debt Relief in Low‐Income Countries: Background, Evolution, and Effects

Graham Bird and Robert Powell

in Finance, Development, and the IMF

The conventional modalities for providing financial assistance to low-income countries have been foreign aid and debt relief. Although some attention has been paid to establishing new methods of ... More

The conventional modalities for providing financial assistance to low-income countries have been foreign aid and debt relief. Although some attention has been paid to establishing new methods of development financing, recent global initiatives have concentrated instead on the traditional ones. This chapter focuses on debt relief. It describes how debt relief to indebted poor countries has evolved from early attempts to relax the ‘terms’ applied to poor country debt, to the heavily indebted poor country (HIPC) initiative and its enhancement and, more recently, to the multilateral debt relief initiative first proposed in June 2005 at the G8 summit. It gives some calculations of the size of the relief provided. It also discusses and estimates the extent to which debt relief has been ‘additional’. In this context, it examines the relationship between debt relief and foreign aid; has it been positive or negative? The empirical part of the chapter focuses on the low-income countries of Sub Saharan Africa and shows that the effects of debt relief on aid flows and resource transfers have changed over time. The chapter conjectures as to why these changes may have occurred, and discusses some of the more important contemporary policy issues surrounding debt relief.Less

Widening the Circle, Narrowing the Outcome: The 1997 Asian Financial Crisis

Kathryn C. Lavelle

in Legislating International Organization: The US Congress, the IMF, and the World Bank

This chapter considers the moral hazard stage of the relationship between Congress and the IMF and World Bank. The chief exogenous shocks came from the 1995 Mexican peso crisis and 1997 Asian ... More

This chapter considers the moral hazard stage of the relationship between Congress and the IMF and World Bank. The chief exogenous shocks came from the 1995 Mexican peso crisis and 1997 Asian financial crisis, which caused many to reevaluate the role of the IMF in preventing financial instability. The chief endogenous change came with Republican control of the House during the Bill Clinton administration, ushering in an era of divided government in reverse. The chapter argues that the Republicans had connected party ideology to a very specific legislative agenda during the election, tying committee chairs more tightly to the majority party. Congressional advocacy developed with the growing use of appropriations bills to alter the course of public policy. As the constituencies for the Bretton Woods institutions fractured or disintegrated, the results were extended funding delays and additional policy demands in the form of the Meltzer Commission, debt relief, shift in the use of concessional loans to grants, and debt relief. By the end of the stage when the Argentine crisis occurred, the IMF searched openly for a mission and the World Bank’s role appeared to be obsolete, given the volume and sophistication of disintermediated capital flows.Less

A Matter of Life and Debt

David M. Webber

in Global Statesman: How Gordon Brown Took New Labour to the World

The first of these case study chapters in chapter 5 draws parallels between the economic framework designed by Treasury officials at home and ‘the new international economic architecture’ that Gordon ... More

The first of these case study chapters in chapter 5 draws parallels between the economic framework designed by Treasury officials at home and ‘the new international economic architecture’ that Gordon Brown was keen to pursue abroad. This would provide the basis for a new approach to debt relief to reform the Heavily Indebted Poor Countries initiative. The new Multilateral Debt Relief Initiative would be conditional upon recipient countries meeting their obligations towards this new economic architecture, designed by Brown and based upon the principles of the ‘post-Washington Consensus’. This approach however, ran counter to many within civil society who viewed the issue of debt relief in ‘moral’ rather than simply ‘economic’ terms. In meeting with these different faith groups, NGOs and other debt activists, Brown certainly appeared sympathetic to such claims but the biblical language of forgiveness, justice and redemption that he used in speaking to these audiences differed from when he spoke in altogether more punitive terms to the international financial institutions. Here Brown spoke of the need for greater stability, demanded that indebted countries recognise their financial obligations, and urged greater surveillance by the International Monetary Fund of these countries national accounts.Less

Why the Code of Conduct for Resolving Sovereign Debt Crises Falls Short

Barry Herman

in Overcoming Developing Country Debt Crises

This chapter turns our attention to a reform initiative driven by the private financial community in the form of a voluntary code of good conduct that would informally pressure the debtor countries ... More

This chapter turns our attention to a reform initiative driven by the private financial community in the form of a voluntary code of good conduct that would informally pressure the debtor countries to follow policies and practices that the creditors advocate. Although implementation of the code is now monitored by a group of prominent individuals from the private and public sectors convoked by an international bankers' organization, it is not clear that it will play a role in any wave of sovereign insolvencies. After all, and unlike a bankruptcy regime, it is purely voluntary. This chapter suggests, instead, how to develop an alternative that would have greater credibility with debtors as well as creditors and could have some force behind it.Less

Social Change and the Transition from the Third Dynasty of Ur to the Old Babylonian Kingdoms c.2112–1595 bce

Tonia Sharlach

in Regime Change in the Ancient Near East and Egypt: From Sargon of Agade to Saddam Hussein

This chapter examines the social change associated with the transition from the Third Dynasty of Ur to the Old Babylonian Kingdoms in ancient Mesopotamia during the period from c.2112 to 1595 BCE. It ... More

This chapter examines the social change associated with the transition from the Third Dynasty of Ur to the Old Babylonian Kingdoms in ancient Mesopotamia during the period from c.2112 to 1595 BCE. It identifies certain key institutions at the time of the Third Dynasty of Ur and attempts to trace their evolution into Old Babylonian times. The analysis of the debt relief edicts and naditu priestesses reveals the discontinuities in the social and economic fabric of these two periods.Less

Overview of Ugandan Economic Reform since 1986

Alan Whitworth and Tim Williamson

in Uganda's Economic Reforms: Insider Accounts

This synthesis chapter draws out the main findings from the individual chapters. After much agonizing over the direction of economic policy, three fundamental reforms between 1990 and 1992 ... More

This synthesis chapter draws out the main findings from the individual chapters. After much agonizing over the direction of economic policy, three fundamental reforms between 1990 and 1992 —legalization of the parallel foreign exchange market, liberalization of coffee marketing, and the establishment of fiscal discipline — brought macroeconomic stability. Together with trade liberalization and privatization, Uganda was set on the road to a liberal, capitalist economy. Concern that growth was bypassing the poor led to a focus on poverty reduction between the mid 1990s and early 2000s. Measures such as decentralization, the Poverty Eradication Action Plan, the Medium Term Expenditure Framework, the Poverty Action Fund, and Sector Working Groups succeeded in attracting increased aid and channeling it into poverty reduction. Sound economic management and a clear commitment to poverty reduction together explain why Uganda was the first beneficiary of both HIPC debt relief and the shift from project aid to budget support. The resulting increase in public service delivery contributed to rapid poverty reduction. The pace of reform has eased since 2002. The chapter concludes by emphasizing the crucial importance of political support for successful economic reform.Less

The Banks and Civil Society

in Behind the Development Banks: Washington Politics, World Poverty, and the Wealth of Nations

This chapter explores how increased congressional activism in the banks created an opening for civil society groups to shape U.S. policy toward them, emphasizing on human rights in the 1970s, the ... More

This chapter explores how increased congressional activism in the banks created an opening for civil society groups to shape U.S. policy toward them, emphasizing on human rights in the 1970s, the environment in the 1980s and 1990s, and heavily indebted poor country (HIPC) debt relief in the 1990s and into the twenty-first century. There has been a rise of civil society advocacy around the multilateral development banks (MDBs). It argues that the debt-relief initiative was the most successful and human rights the least so. Human rights advocates won some important victories. The congressional activism around the MDBs and the environment are addressed. Over the past three decades, social movements working through nongovernmental organizations (NGOs) have had a growing impact on U.S. policies toward the MDBs and, thereby, on the banks' activities. It is shown that each wave of social movement involvement has paved the way for greater future activism.Less

Poverty Reduction Strategy Papers: Bold New Approach to Poverty Eradication or Old Wine in New Bottles?

Sarah Wamala, Ichiro Kawachi, and Besinati Phiri Mpepo

in Globalization and Health

This chapter focuses on poverty reduction strategy papers (PRSPs). PRSPs were introduced by the World Bank and International Monetary Fund (IMF) in September 1999 as a new requirement for countries ... More

This chapter focuses on poverty reduction strategy papers (PRSPs). PRSPs were introduced by the World Bank and International Monetary Fund (IMF) in September 1999 as a new requirement for countries to receive concessional funding and debt relief. PRSPs are national planning frameworks, and describe a country's macroeconomic, structural, and social policies and programs to promote growth and reduce poverty, as well as associated external financing needs. PRSPs may signal an improvement on structural adjustment programs (SAPs) but still have some distance to go in recognizing and addressing issues such as equity and gender disparities. Although it is too soon to appraise the outcomes of PRSPs, some skepticism has been voiced in some quarters that they are SAPs by another name.Less

“Hard Times Is the Cry”: Debt in Populist Thought in North Carolina

David Silkenat

in Populism in the South Revisited: New Interpretations and New Departures

This chapter focuses on North Carolina, the one state where the Populists achieved statewide power, to determine how the Populists saw the issue of debt and how debt influenced Populist attempts to ... More

This chapter focuses on North Carolina, the one state where the Populists achieved statewide power, to determine how the Populists saw the issue of debt and how debt influenced Populist attempts to reform the state economy. It places the Populists’ notion of debt in the long duree and traces the development of attitudes toward and the rhetoric of debt. By the 1880s and 1890s, white farmers saw debt as a form of slavery and oppression. It is argued that debt relief was a central tenet of North Carolina Populism, but once the Populists achieved power in the mid-1890s, they were unable to pass much in the way of debt relief, in part because they achieved power in alliance with Republicans, who were less than enthusiastic about wholesale debt reform.Less

Aid Flows and Commodity Prices

Mohammad A. Razzaque, Philip Osafa‐Kwaako, and Roman Grynberg

in Commodity Prices and Development

This final chapter argues for a comprehensive approach to the commodity problem with the help of increased aid flow, debt relief, diversification, and trade preferences.

Public Finances of Special Category States

Govind Bhattacharjee

in Special Category States of India

This chapter contains detailed analysis of public finances of the special category states during the ten year period i.e., 2000– 01 to 2010–11, in order to assess the impact of sustained Central ... More

This chapter contains detailed analysis of public finances of the special category states during the ten year period i.e., 2000– 01 to 2010–11, in order to assess the impact of sustained Central funding of these states. Discussing the intricacies of Government finances, the chapter then proceeds to assess the financial management of special category states in respect of each of the four major areas: resource, expenditure, debt and deficit, using a set of indicators for each of these areas. These states are among the most heavily indebted states of India; the chapter also examines the sustainability of their debt as well as sustainability, flexibility, and vulnerability of their finances. The chapter then constructs independent indices in respect of resource management, expenditure management, debt management, and deficit management and combines these indices to create a composite index to measure and rank these states according to their performance in relation to their management of public finances.Less