Analysis. Hipc Initiative Of Debt Relief Assistance In Africa

Heavy debt has been one of the major obstacles to African development particularly in the 1990s. Since 1996, international multi-lateral financial organizations (such as World Bank and IMF) took an initiative to relieve the debt burden for low income and heavily indebted countries (mainly sub-Saharan Africa countries). The program is namely the Heavily Indebted Poor Countries Initiative (HIPC).Compared with previous international debt relief programs, HIPC is a new conception that offers larger scale debt relief. Since the implementation of HIPC, some debts have been relieved, but it is far from the African Countries' demand. In addition, the implementation of HIPC will bring about new influences on African economic and political development in the future. The market of African Countries could be further liberalized. But if the economic models and industrial structures can't adapt to the requirement of globalization, African Countries would continue to be raw material suppliers to western countries; meanwhile, their state-sovereignty will inevitably face challenges from international financial agencies. And they might become "bankrupt corporations" under supervisions of the World Bank and the IMF.Unlike the Latin-American Debt Crisis in 1980's, the Western developed countries have not allowed the similar effect to happen for the African cases, due to African HIPC countries' debt characteristic. Sometimes, interests of non-commercial creditors may give place to the countries' long-term interests, for political and economic considerations. The implementation of HIPC is a process combining the creditor-countries' official short-term interests with private sectors' long-term interests.Where there is a challenge there is an opportunity. African official debts account for a large proportion in the aggregate liabilities. This determines that African countries can utilize HIPC system to converse in a dialogue with international society and the World Bank/IMF, and strive for more favorable conditions, then attain loans and debts relief. Accordingly, by dint of HIPC, African countries can promote domestic social reform, industrial transition and rationalization of economic structure, then to create good environment for foreign investment, and to improve their exports and reduce deficits in the balance of payments. On the other hand, African countries should combine development programs with their practical situation.