Towards Debt Sustainability in Highly Indebted Developing Countries: An Appraisal of some attempts

Abstract

This paper appraises the efforts of official creditors to help highly indebted developing countries escape the vicious cycle of debt unsustainability. It examines three major models through which highly indebted developing countries were assisted to achieve debt sustainability, namely; the Baker Plan, the Brady Plan and the Highly Indebted Poor Countries Initiative. In spite of the huge monetary costs incurred to run these programmes, debt sustainability continues to be a major challenge for most of the economies that benefitted from debt relief. The example of Ghana, a beneficiary of the Highly Indebted Poor Countries Initiative is highlighted to support the general evidence from literature. Highly indebted developing countries certainly need more than debt relief, and it is probably becoming clearer that money may not be the most important need of developing economies.

Keywords: Baker plan, Brady plan, debt sustainability, developing countries, Highly Indebted Poor Countries Initiative, Ghana.