Heavily Indebted Poor Country (HIPC)

Criteria for admission

Before being included in the debt relief initiative, the World Bank and the International Monetary Fund lay down strict criteria. The aim is to cancel debts only for those states that are already heavily indebted and are in all likelihood unable to pay these liabilities on their own. On the other hand, these states should also have the ability to grow out of poverty after a waiver. A state must therefore not only be particularly poor, but must also fulfil certain conditions at the political level.

These conditions are usually determined and monitored over several years in a three-stage process. Eritrea, Somalia and Sudan, for example, have been on the list for some time now of countries that fulfil the conditions of poverty. None of these three countries has so far been able to convincingly demonstrate or even show that the government is also capable of fighting poverty. To achieve this, it is also necessary to implement effective reforms in advance and to demonstrate success.

Doubts about sustainability

The aim of the initiative is to reduce poverty in the affected countries and to enable governments to stand on their own two feet through debt relief. The reform programs controlled by the community are designed to achieve effective action. An already economically weakened country may also use this debt relief to borrow money again from other states and not pay it back either.

Another injustice is that individual countries are rewarded with debt relief even though they have not managed to stand on their own two feet, while the countries that are just above the poverty line because their reforms have been successful are not rewarded.

Key figures in comparison

(All figures weighted according to population share.)