Debt reduction for poverty eradication in the least developed countries: Analysis and recommendations on LDC debt

This paper reviews the main obstacles to human and social development posed by the current external debt burdens of the least development countries. In particular, it analyses the shortcomings of the mechanisms and thresholds used to assess the sustainability of debt levels in the HIPC Initiative. An alternative needs-based approach analysis of debt sustainability is proposed. The methodology explicitly emphasizes the need to prioritize poor countries’ social and poverty reducing expenditures over external debt servicing. Such an ‘affordable debt service’ analysis of debt sustainability shows clearly that additional debt reduction is required if the HIPCs are to achieve minimum levels of human development by 2015. – debt ; poverty ; economic development ; foreign aid ; debt sustainability