Publication

This paper examines whether poor countries' debt situations have stabilized or whether systemic risks of debt distress remain, four years after large-scale debt cancellation. The author assesses new lending volume levels and several issues that underpin the new debt sustainability framework. He finds that IMF and World Bank growth projections for Heavily Indebted Poor Countries (HIPCs) are structurally over-optimistic and that HIPCs continue to experience significant volatility in country performance measures. The author argues that the IMF, World Bank and African Development Bank should reconsider the effectiveness of the debt sustainability framework.