there have been several challenges to keeping the HIPC Initiative an appropriate decision. One question that comes to mind is how do you keep giving away money to pay off these incredibly high debts when financial resources are limited? You can not just keeping wiping out debt forever or else you may run out of resources and go into debt yourself. Another challenge is how you keep these indebt countries from making the same mistakes again in the future. It is the World Bank and IMF’s goal to establish well thought out financial plans to make sure these countries will not fall into debt again. However, they can not guarantee this because they will not be able to “hold their hand” forever.Now that the successes and challenges have been identified, we shall look at the advantages and disadvantages of the debt relief program. First of all, a debt relief program is obviously going to help out the country in debt. However, one advantage is how this could also help out the more developed nations. For instance, by relieving a country’s debt, it becomes more economically stable and opens up the market for that nation which allows other countries to do more business with them. When the market expands, that creates more demand for products sold in other countries like the United States. The United States will be able to export more to those countries in Brazil because they will be more financially stable to buy those exports.In addition, some argue that a total debt cancellation will help the attack on worldwide poverty. According to the Delechat (2001), “further reduction of debt service obligations would allow the HIPCs to make more poverty-related investments.” (p. 2). They believe the best way for the international community to support the poverty reduction strategies of low-income countries is by opening their markets to the exports for poor countries and by increasing new concessional flows.Loo...
