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- 2021-10-10
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- 1970-1-1
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1: Relieving a poor country of its debt is important. HIPC launched by IMF + WB, along with the MDRI helped to relieve the debt. however, implementation is difficult.
2. HIPC = a country that has a level of debt that cannot be managed by traditional means. HIPC at the one hand needs the resources and on the other hand has rules that limit this spending. Sudden spending might lead to macroeconomic instability. Poor countries need to spend money desperately but wisely.
3. HIPC countries lack a private sector. Property rights are non-existent. thus local investors don't exist and outside investors are forced to deal with corrupt governmental agencies. No guarantee exists for the fund and its intended destination.
4. Dept relief is important but not sufficient. Citizens should take part in their own development and the country should balance the spending and careful investment. Otherwise, the debt will return. |
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