{
  "id": "RL30449",
  "type": "CRS Report",
  "typeId": "REPORTS",
  "number": "RL30449",
  "active": false,
  "source": "EveryCRSReport.com",
  "versions": [
    {
      "source": "EveryCRSReport.com",
      "id": 101789,
      "date": "2000-03-01",
      "retrieved": "2016-05-24T20:38:40.452941",
      "title": "Debt and Development in Poor Countries: Rethinking Policy Responses",
      "summary": "The poorest countries face enormous challenges to development, with economic issues still\npresenting some of the greatest obstacles. High on the current public policy agenda, including in the\nU.S. Congress, is financing increased debt relief for the poorest countries. Indebtedness is not a new\nissue. In the 1980s, Latin American middle income countries became severely indebted to private\nbanks, causing a financial crisis with prolonged economic and social consequences. Today, the\nHeavily Indebted Poor Countries (HIPCs), mostly located in Sub-Saharan Africa, face worse\neconomic prospects and relatively large debt burdens to official creditors.\n  For most developing countries, debt is a marginal issue and not the primary obstacle to growth\nand development. For the HIPC countries, however, debt may be a drag on economic growth and\nso debt forgiveness may afford an opportunity to boost the development process. Total HIPC\ncountry external debt amounts to $206 billion and current HIPC proposals anticipate total debt\nreduction costs for all creditors in 1999 net present value terms to be $28.2 billion, not large amounts\nby developed country or global standards, but as yet mostly unfunded.\n  A decision on financing HIPC debt relief falls to Congress. If debt reduction is desired,\nexperience argues that it be comprehensive and timely, but probably not unconditional, which could\nbe counterproductive if it is a replacement for, or diminishes incentives to effect, broader economic,\npolitical, and social reform. For debt relief to support growth and development, it is arguably best\nused if supported by a well-managed, long-term investment strategy that ensures clearly productive\npublic and private use of debt. This point speaks to the larger issue of addressing the need for\nimproved social, political, and economic institutions to encourage political participation and\nentrepreneurial activity that will help create an environment conducive for attracting foreign and\ndomestic capital investment.\n  For their part, developed countries and international financial institutions might consider how\nbest to support developing country attempts to reform and adapt to changing international economic\ntrends. Solutions that prolong debt relief may delay development; this has led to recent changes to\nthe HIPC initiative intended to quicken and deepen debt reduction. Also, foreign aid can be helpful\nat the margin and may be used to help with immediate social needs, but cannot finance all long-term\ndevelopment needs. Other policy support, such as removing trade barriers to developing country\ngoods, would strongly complement debt relief.\n  Diminishing poverty in poor countries has become a major new emphasis of the HIPC debt\nreduction initiative, yet debt relief is no guarantee of success. Debt does not necessarily cause\npoverty, so more than debt reduction many be needed. Also, because financial resources are largely\nfungible within government budgets, debt relief cannot assure that social program spending will be\ngiven priority. In summary, given the myriad factors that must work together for development to\ntake place, the benefit of debt relief may be limited unless it becomes part of broader program for\nsocial, political, and economic change.",
      "type": "CRS Report",
      "typeId": "REPORTS",
      "active": false,
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      "topics": []
    }
  ],
  "topics": [
    "Economic Policy",
    "Foreign Affairs",
    "Industry and Trade"
  ]
}