At their meetings in September 1996, the IMF’s Interim Committee and the IMF and World Bank’s Development Committee endorsed specific proposals put forward jointly by the IMF and the World Bank to address the problems of a limited number of HIPCs that follow sound policies, but for which traditional debt-relief mechanisms are inadequate to secure a sustainable external debt position over the medium term. The Committees requested the two institutions to proceed quickly with the implementation of the Initiative.
The HIPC Initiative is not a panacea for all of the economic problems of the HIPCs. Even if, hypothetically, all of the external debts of the HIPCs were forgiven, most would still continue to need large-scale concessional external assistance; as noted earlier, currently their receipts of such assistance are much larger than their debt-service payments. Given their high levels of poverty and limited domestic resources available to meet the costs of social programs that address the needs of the poor, most HIPCs are likely to continue to be dependent on aid. The HIPC Initiative does not imply a cessation of aid to HIPCs: if it leads to withdrawal of aid, it will fail. However, given the pressures on aid budgets in major donor countries, which are likely to prevail in the foreseeable future, continuing aid will be most effective if it catalyzes private financial flows, particularly investment. There is a limit to the extent to which these flows can be debt creating, if future overindebtedness is to be avoided. This suggests a need for institution building that is essential for attracting private investment as well as for providing support for putting in place necessary infrastructure.
This pamphlet describes the IMF-World Bank initiative begun in 1996 to address in a comprehensive manner the overall debt burden of eligible heavily indebted poor countries (HIPCs) pursuing programs of adjustment and reform supported by the two organizations. The aim of the Initiative is to reduce these countries debt to sustainable levels so that they can meet current and future debt service obligations without unduly compromising growth. This pamphlet describes the rationale for and the main features of the Initiative as it was originally conceived in 1996 and its implementation through the fall of 1999, which culminated in the approval of an enhanced HIPC Initiative in late 1999 that is aimed at providing deeper and more rapid debt relief to a larger number of countries. The enhanced HIPC Initiative also seeks to ensure that debt relief is integrated into a comprehensive poverty reduction strategy that is developed with broad-based participation and tailored to the country's circumstances.
Mr. Sanjaya P Panth, Mr. Paul Cashin, and Mr. W. A Bauer
The Caribbean has made substantial progress in recent years in implementing economic reforms, both at the national and regional level. The Caribbean: Enhancing Economic Integration examines the product of the efforts made by Caribbean policymakers to strengthen regional cooperation and integration, which has yielded economic transformation and tighter integration with the global economy. This volume discusses regional financial integration as a means of deepening financial systems and raising regional growth; the relationship between tax incentives and investment, where harmonized regional action is important in seeking to overcome collective actions problems; and the consequences for the Caribbean of the erosion of trade preferences in key export markets. The book is based on empirical research carried out as part of the IMF's regional surveillance work in the Caribbean.
Bilateral creditors. These creditors are governments. Their claims are loans extended by, or guaranteed by, governments or official agencies, such as export credit agencies. Certain official creditors participate in debt reschedulings under the aegis of the Paris Club (see below).
The HIPC Initiative is a framework developed jointly by the IMF and the World Bank to address the external debt problems of the heavily indebted poor countries (HIPCs). It is based on the following guiding principles: (I) the objective is to target overall debt sustainability on a case-by-case basis, focusing on the totality of a country’s debt; (2) actions should be envisaged only when the debtor has shown, through a track record, ability to put to good use the exceptional support provided; (3) the new measures should build, as much as possible, on existing mechanisms; (4) additional action should be coordinated among all creditors involved, with broad and equitable participation; (5) action by multilateral creditors should preserve their financial integrity and preferred creditor status; and (6) new external finance for the indebted countries should be on appropriately concessional terms.
The traditional mechanisms for dealing with the debt problems of low-income countries are sufficiently robust to deal with the debt burden of many HIPCs and to reduce their external debts to sustainable levels (see definition below). As noted earlier, the external positions of the HIPCs vary widely and indeed some countries such as Ghana, Kenya, and the Lao People’s Democratic Republic have never received concessional reschedulings from the Paris Club. Others, such as Equatorial Guinea and Vietnam, are unlikely to need the full use of traditional debt-relief mechanisms in order to reach debt levels that are sustainable. However, even with sound economic policies and full use of traditional mechanisms for rescheduling and debt reduction and the continued provision of concessional financing, a number of countries are not expected to reach sustainable levels of debt within a reasonable period of time. To deal with this problem, the IMF and World Bank jointly proposed and put in place in September 1996 the HIPC Initiative that aims at reducing the debt burdens of all eligible HIPCs to sustainable levels, provided they adopt and pursue strong programs of adjustment and reform. The Initiative builds on instruments available to the international community to deal decisively with the debt problems of the low-income countries and allows them to exit, once and for all, from the rescheduling process.
This paper focuses on economic developments in Guyana during the 1990s. By 1991, economic performance had turned around in response to the shift in economic policies and the improved incentive framework. Following sizable reductions in 1989–90, real GDP grew by about 7 percent a year in 1991 and 1992, mainly owing to a recovery of export-related production and new foreign investments in the bauxite, gold, and forestry sectors. By 1992, inflation had declined markedly; the fiscal and external deficits were reduced substantially; and private and official capital inflows had risen significantly.
The statistical data on value added by sector at current prices, value added by sector at constant prices, GDP by expenditure at current prices, consumer prices, population estimates, employment in the public sector, summary of the operations of the public sector and operations of the central government of Guyana are presented in this paper. The data on monetary survey, accounts of the bank of Guyana, value, price, and volume indices for exports and imports commodity, and related economic indices are also presented.
This Selected Issues paper describes the revenue instability and its consequences for Suriname. It explores some options for policy rules that could be considered in the case of Suriname. The paper analyzes inflation in Suriname from its historical and international perspectives, reviews the monetary policy instruments and the institutional framework, and describes the exchange rate regime and its main developments. The paper also analyzes the type of macroeconomic shocks and the domestic transmission mechanism for Suriname.