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The New World Bank/IMFDebt Sustainability Framework: A Human Development Assessment (April 2006)

Rethinking Bretton Woods | Wed, May 3, 2006

By Aldo Caliari
In this paper for CIDSE ( International Cooperation for Development and Solidarity), Rethinking Bretton Woods project Director Aldo Caliari looks at the debt sustainability framework of the World Bank and International Monetary Fund (IMF) based on an approach that holds that human development imperatives should take precedence over debt payments, a principle that has been partially endorsed by the International Conference on Financing for Development and other international instruments. 

Introduction

A Human Development Approach to Debt Sustainability

Consistent with the principles of Catholic Social Teaching that guide its advocacy work, CIDSE has long advocated a human development approach to debt sustainability. This approach holds that human development imperatives should take precedence over debt payments, a principle that has been partially endorsed by the International Conference on Financing for Development and other international instruments.1

The premises of the Human Development Approach and the Management of Debt by the International Community

Starting in the 1980s several schemes have increasingly recognized the need for debt relief and debt cancellation. The HIPC initiative, in 1996, was the first scheme to address the debt problem in a comprehensive manner, providing the means for reduction of two-thirds of debt for the beneficiary countries. The discussions leading to the adoption of the Debt Sustainability Framework (DSF or "the Framework") stressed this would only address the debt problem in a forward-looking way, that is, ruling out further cancellation a-la-HIPC. The Framework, in fact, implied significant changes to the HIPC as a mechanism for debt management. (Box 1 contains a brief explanation of the main features of HIPC and the DSF)

This paper assesses the DSF using the human development approach to debt sustainability as a lens: it asks the question of whether or to what extent the DSF is consistent with it. In carrying out this analysis this paper relies on a review of forty-three Debt Sustainability Assessments carried out under the Framework since its adoption in April 2005.2

Click here for the full paper.

Click here for the version in French.