DP3297 Will HIPC Matter? The Debt Game and Donor Behaviour in Africa

• Nancy Birdsall Ishac Diwan Stijn Claessens
20 Apr 2002

In this Paper we focus on the question: Will the HIPC debt reduction program help in the transformation of the development assistance business and change the rules of the ?debt game? in Africa? We concentrate on the donor and official creditor side, by exploring how the growing debt of African countries, over the last two decades, has affected the provision of new resources by the donor community. Our results indicate, if debt levels are reduced sufficiently in high debt countries, that donors can shift from the current pattern of non-selectivity and defensive lending to a low debt regime ? a regime that has in the past allowed selectivity in lending in relation to levels of poverty and quality of policy.