Debt forgiveness can either be partial or total. Forgiving a debt can also be termed as debt relief. Debt relief has at times been a source of controversy with some people opposed to it. Some people have termed it as a blank cheque to governments. The main concern has always been that the savings will never reach the poor in countries where governments are corrupt. The opponents also argue that countries that have been given the relief normally take advantage and go ahead to contract other debts with the hope that the same debts will be forgiven.
Corrupt officials in various governments use debt forgiveness to amass wealth for themselves as well invest in rich countries denying the common man, the trickle-down effect. According to the proponents, the money would rather be spent on aid projects in the various countries. Others also detest the conditions that come with the relief.
Heavily Indebted Poor Countries (HIPC) program was set up to provide relief to the poorest countries while at the same time trying to ensure that the money is spent on poverty reduction in these very countries.
HIPC initiative provides debt relief to poor countries under conditions similar to those attached to IMF and World Bank loans. Some of the conditions include structural adjustments reforms. The reforms can involve the privatization of public utilities for example water and electricity. For a country to qualify for an irrevocable HIPC debt forgiveness, it must maintain economic stability as well as satisfactorily implement a Poverty Reduction Strategy.
Posted in Debt Relief | 
Tags: Common Man, Corrupt Officials, Debt Forgiveness, Debt Relief, Debts, Poorest Countries, Public Utilities, Trickle Down Effect