Debt Relief Agreements
The HIPC programme is subject to conditions similar to those of International Monetary Fund (IMF) and World Bank loans, which require structural adjustment reforms, sometimes including the privatization of public services, including water and electricity. To qualify for irrevocable debt cancellation, countries must also maintain macroeconomic stability and satisfactorily implement a poverty reduction strategy for at least one year. In an effort to reduce inflation, some countries have been under pressure to cut spending in the health and education sectors. While the World Bank considers the HIPC initiative a success, some scientists are more critical of it.  The main debt cancellation mechanism in modern societies is bankruptcy in which a debtor who is unable or unable to pay his debt goes bankrupt and renegotiates his debts, or a creditor initiates it. As part of debt restructuring, debt conditions are changed, which can help reduce debt owed. If the debtor chooses bankruptcy when he can repay the debt, it is called a strategic bankruptcy. The progress made so far is a decisive step in the fight against poverty, but much remains to be done. The deep concerns of civil society in many countries have helped to encourage the international community to act within the framework of the HIPC initiative.
Today, some debt relief activists are calling for the total cancellation of all HIPC debts. Some focus their efforts on international financial institutions. Is this really the best way to ensure that resources are available to fight poverty and promote development in low-income countries? Sustainable debt is debt that can be considered manageable without causing harm to a long-term economy and will not be paid for by future loans. Inflation, the reduction in the nominal value of money, reduces the real value of debt. While lenders take inflation into account when setting the terms of a loan, unexpected increases in the inflation rate lead to an outright write-off of the debt. THE IMF: The Fund would suffer serious damage without full funding from bilateral donors, radically changing its role as anchor for the international financial system based on the renewable nature of its resources. Debt cancellation would not only eliminate PRGF loans, but would also compromise the financial integrity of the Fund. The IMF`s gold reserves are a fundamental force in its financial position, giving it more credibility and the ability to support its broader adherence to crisis situations. Members` decision in 1999 to use, on an exceptional basis, investment income from profits from limited OTC gold sales to finance the IMF`s contribution to the HIPC Initiative has had a significant cost to the institution and its members. . . .
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