Sovereign+Debt

__Sovereign Debt__ __ What is Sovereign Debt ?: __  A debt instrument guaranteed by a government

"In our view, the most practical and broadly acceptable reform would be to have sovereign borrowers and their creditors put a package of new clauses into their debt contracts."
 * __ Statement by U.S. Department of the Treasury __**

__**              What is being done to help countries in debt? **__ One innitiative that was created to help countries in debt is the Heavily Indebted Poor Countries (HIPC) Innitiative. It was first launched in 1996 by the IMF and World Bank, with the aim of ensuring that no poor country faces a debt burden it cannot manage. Forty-one countries have been found to be eligible or potentially eligible for HIPC Initiative assistance. To date, debt reduction packages have been approved for 33 countries, 27 of them in Africa, providing US$51 billion. One issue is the cost of relieving the debt from these countries. About half of this will be provided by bilateral creditors, and the rest will come from multilateral lenders. The IMF's share of the cost is financed primarily by the investment income on the net proceeds from off-market gold sales in 1999.

__** Discussion Questions **__

Do you think programs like the HIPC innitiative are an effective way of solving a country's economic issues?

Do you think that countries that are struggling to pay back debts should be held responsible for the interest on their loan?

Does eliminating a country's debt help them long-term or does it only provide short-term relief?

__** Bibliography ** International Monetary Fund__. Oct. 2008. 14 Nov. 2008 [|**http://www.imf.org/external/np/exr/facts/hipc.htm**]**.**

__World bank HIPC Innitiative__. Oct. 1999. 14 Nov. 2008 http://www1.worldbank.org/devoutreach/spring01/images7/hipc_map_7.gif>.