A comprehensive approach to reduce the external debt of the world's poorest, most heavily indebted countries.

Over the last several years, there has been a worldwide movement calling to cancel the debts poor countries owe to their creditors (developed country governments, commercial banks, and international financial institutions, such as the World Bank and the International Monetary Fund).

Excessive debt has hindered poor countries' development. When countries spend all their funds repaying debts, it is impossible for them to allocate money for essential services such as health and education. These countries can't earn their way out of debt and need help to start again.

How did countries accrue so much debt?

Much of the foreign debt owed by many low-income countries—many of them commodity exporting countries— throughout the 1970s and 1980s left many nations with unsustaibale debt burdens. in the 1970s and 1980s commodity prices were high and many had borrowed money to fund domestic projects thinking that high commodity prices and earnings from exports would last and that eventually they would be able to repay their debt. But the oil-price shock and a global recession in the late 1970s and early 1980s caused commodity prices and exports to fall.  As a result, these countries found themselves with huge debt repayments.

Significant progress has been made over the past decade in helping low income countries achieve and maintain debt sustainability.

In 1996, international community decided to give these countries a fresh start by forgiving a large poriton of their debt. The World Bank, the IMF and other international lenders agreed to cancel significant amounts of the outstanding debt to countries that qualified for a programme called the Highly Indebted Poor Countries (HIPC) initiave.

In return, these countries promised to reform their policies and institutions and put more money toward improving health, education and other social services, as well as to work to reach the Millennium Development Goals.

Now, the world leaders of the world’s richest countries (who are also the biggest donors), bilateral creditors and the international finanical institutions are looking at ways to cancel this debt and at the same time, to fund debt relief.

How does HIPC work?

• As of June 2010, 40 countries are participating in the HIPC Initiative.
• 33 of the 40 countries in the HIPC Initiative are in sub-Saharan Africa.
• 30 countries are currently receiving irrevocable debt relief. These countries have achieved the reforms they agreed to at the decision point.
• 6 countries are receiving interim debt relief. These countries are in the process of implementing the reforms they agreed to at the decision point.
• The remaining 4 countries have not yet been able to qualify for debt relief because of social difficulties such as civil and cross-border conflict, governance problems, etc.

If you live in a developed country learn how much money your government gives through bilateral and multilateral assistance, and lobby your government to give more. View official development assistance (ODA) levels by country.

If you live in a developing country learn how much money your government receives in development assistance and take action to ensure government funds are properly spent.