“The Problem of Multilateral Debt: Politics and Implications for Advocacy” focuses on recent changes in policy in regard to multilateral debt. The Highly Indebted Poor Country Initiative (HIPC Initiative), approved at the World Bank and International Monetary Fund (IMF) board meetings in October of 1996, is unprecedented in several aspects: never before have the World Bank and IMF provided relief on debts owed to them; and never before has there been a single initiative coordinating all the creditors in providing comprehensive debt relief with the aim of lowering debt levels of poor countries to a defined level of sustainability. Research into reasons for the change in policy at this time leads to conclusions on the nature of the political environment in the United States toward the multilateral institutions and foreign aid in general. Since the end of the cold war, there has been a lack of definition in the goals of US foreign aid which has led to cuts in the budget, particularly to multilateral aid. These cuts have led to pressure on the system of debt refinance, by which substantial repayments are made by one creditor to another for poor countries with low capacity to service their debts. Cuts in the budget has been the primary factor leading to greater political will in addressing the problem of multilateral debt.


International Economics | Political Economy