Prospective aid and indebtedness relief: A proposal

Lodewijk Berlage, Danny Cassimon, Jacques Dreze, Paul Reding

Research output: Contribution to journalArticlepeer-review


Primary needs of human development are not met in poor developing countries. Although ambitious goals have been set by the international community to meet specific human development targets by 2015, Official Development Assistance is lagging and excessive external debt continues to drain much needed resources from poor countries despite the recent heavily indebted poor countries (HIPC) Initiative. This paper outlines a 15-year program for implementing the 2015 human development goals while resolving fully the debt overhang problem for a set of 49 poor countries. The proposal requires additional contributions from 23 rich countries amounting to 0.1 of 1% of their GNP over each of the 15 years. Although only a small part of the effort would take the form of debt cancellation, the outstanding debt of the 49 poor countries would be totally extinct after 15 years. The program, to be implemented in a multilateral framework in which all interested parties have an effective voice, relies on several basic premises: a long-term commitment by donors; a fair burden sharing among creditors; a fair distribution of newly available resources among poor countries, heavily indebted or not; a targeting of these resources to human development programs; and a conditionality guaranteeing reasonable aid effectiveness.

Original languageEnglish
Pages (from-to)1635-1654
Number of pages20
JournalWorld Development
Issue number10
Publication statusPublished - Oct 2003


  • Debt reduction
  • Development aid
  • Human development
  • Low-income countries
  • Millennium development goals (MDG)


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