Debt relief, demand for education, and poverty

The objective of this paper is to arrive at a better understanding of the implications of debt relief savings for poverty reduction in HIPC countries by focusing on one important channel of impact—human capital accumulation. Our simulation results suggest that poverty and growth objectives would be mainly enhanced if resources are targeted at the primary and secondary level of education. In addition, targeting education spending to households below the poverty line can potentially have most significant impact on reducing poverty in the economy.