Central America's Foreign Debt Burden and the HIPC Initiative

This paper reviews the foreign debt burden in Central America with special emphasis on Honduras and Nicaragua. These countries have a large debt overhang and they have lagged behind the rest of the region in terms of economic growth. Our work suggests that Honduras and Nicaragua require alleviation...

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Bibliographic Details
Published in:Bulletin of Latin American research 2001-01, Vol.20 (1), p.1-28
Main Authors: Esquivel, Gerardo, Larraín, Felipe, Sachs, Jeffrey D.
Format: Article
Language:English
Subjects:
Central America
Countries
Debt reduction
Debt relief
Debt rescheduling
Debt service
Developing countries
Development Strategies
Economic growth
Economic Planning
Economic Underdevelopment
External debt
External debts
Finance
Fiscal policy
Foreign Aid
Foreign Policy
Gross national product
Honduras
International bank for reconstruction and development
International Economic Organizations
International monetary fund
Nicaragua
Open economies
Public Debt
Sustainable development
Sustainable economies
World Bank
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Summary:This paper reviews the foreign debt burden in Central America with special emphasis on Honduras and Nicaragua. These countries have a large debt overhang and they have lagged behind the rest of the region in terms of economic growth. Our work suggests that Honduras and Nicaragua require alleviation of their foreign debt as a prerequisite to achieve sustained economic growth. The paper also reviews the initiative aimed at reducing the debt burden of the highly indebted poor countries (the HIPC Initiative) and evaluates alternative scenarios of debt reduction for both Honduras and Nicaragua. It ends with a critical assessment of the implications of the fiscal and openness criteria established in the HIPC Initiative.
ISSN:0261-3050
1470-9856
DOI:10.1111/1470-9856.00002