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This paper models the resource implications of debt relief provided to low-income countries (LICs). Obtaining debt relief does not necessarily lead to individual aid-dependent countries receiving more overall resources from the donor community. Preliminary cross-section estimates suggest that debt relief provided to low-income countries in the period 1996 2000 neither crowded out other non-debt relief-related aid flows to the debtors concerned nor created significant extra net resources for those countries. While it is too early to fully assess the resource implications of the enhanced HIPC Initiative, this paper provides a possible approach to such an evaluation.

Exports and Imports --- Financial Risk Management --- Debt --- Debt Management --- Sovereign Debt --- International Lending and Debt Problems --- Foreign Aid --- Finance --- International economics --- Debt relief --- Debt reduction --- Aid flows --- Foreign aid --- Debt service payments --- Asset and liability management --- External debt --- Debts, External --- Economic assistance --- International relief --- Debt service --- United States

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We study how 22 donors allocate their bilateral aid among 147 recipient countries over the 1970- 2004 period to investigate whether changes in the international aid architecture?at the international and country level?have led to changes in behavior. We find that after the fall of the Berlin wall, and especially in the late nineties, bilateral aid responds more to economic need and the quality of a recipient country's policy and institutional environment and less to debt, size, and colonial linkages. Importantly, we find that when a country uses a PRSP and passes the HIPC decision point the perverse effect of large bilateral and multilateral debt shares on aid flows is reduced, suggesting less defensive lending. Overall, it appears international aid architecture changes have led to more selectivity in aid allocations. The specific factors causing these changes remain unclear, however. Furthermore, there remain large differences among donors in selectivity that appear to relate to donors' own institutional environments. Together this suggests that further reforms will have to be multifaceted.

Exports and Imports --- Financial Risk Management --- Foreign Aid --- Debt --- Debt Management --- Sovereign Debt --- International Lending and Debt Problems --- International economics --- Finance --- Aid flows --- Foreign aid --- Public and publicly-guaranteed external debt --- Debt reduction --- Debt relief --- Economic assistance --- International relief --- Debts, External --- United States

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This paper proposes a framework for public debt sustainability analysis (DSA) that is complementary to that generally used by IFIs. The DSA in this paper has three components: (i) an integrated and consistent accounting framework for the Consolidated Public Sector (CPS); (ii) the estimation of an appropriate, and country-specific debt threshold, following the approach proposed by Reinhart, Rogoff and Savastano (2003); and (iii) a method for the calculation of the CPS primary balance to achieve the desired debt targets, without resorting to ad-hoc assumptions for the values of the macroeconomic variables during the planning horizon, in the spirit of Garcia and Rigobon (2004) and Celasun, Debrun and Ostry (2006). The paper uses this approach to analyze the sustainability of the Dominican Republic's Public Debt.

Banks and Banking --- Exports and Imports --- Financial Risk Management --- Macroeconomics --- Public Finance --- Fiscal Policy --- Debt --- Debt Management --- Sovereign Debt --- Monetary Policy --- International Lending and Debt Problems --- Public finance & taxation --- Banking --- International economics --- Finance --- Fiscal stance --- Public debt --- International reserves --- Debt sustainability analysis --- Debt reduction --- Fiscal policy --- Debts, Public --- Foreign exchange reserves --- Debts, External --- Dominican Republic

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This Selected Issues paper and Statistical Appendix on Pakistan looks at the worrisome trend of declining growth from a growth-accounting point of view. The paper provides considerable evidence that Pakistan’s striking “social gap” in education and health is indeed a main culprit for a weakening growth performance. It looks at the financial sector as an additional area that is central for growth and governance, and where reforms are well advanced. The paper also analyzes how to ensure a continuation of prudent fiscal policies in Pakistan that would reduce public debt to more sustainable levels.

Financial Risk Management --- Macroeconomics --- Public Finance --- Production and Operations Management --- Education: General --- Debt --- Debt Management --- Sovereign Debt --- Fiscal Policy --- Production --- Cost --- Capital and Total Factor Productivity --- Capacity --- Health: General --- Education --- Finance --- Public finance & taxation --- Health economics --- Debt reduction --- Public debt --- Total factor productivity --- Fiscal rules --- Asset and liability management --- Health --- Debts, External --- Fiscal policy --- Debts, Public --- Industrial productivity --- Pakistan

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This paper focuses on Central African Republic’s (CAR) completion point under the Enhanced Initiative for Heavily Indebted Poor Countries (HIPC) and debt relief under the Multilateral Debt Relief Initiative (MDRI). In the view of International Development Association (IDA) and IMF staff, CAR has made satisfactory progress in meeting the requirements to reach the completion point. All the floating triggers have been fully implemented. Upon reaching the completion point under the enhanced HIPC Initiative, CAR will also qualify for additional debt relief under the MDRI.

Exports and Imports --- Financial Risk Management --- Public Finance --- Debt --- Debt Management --- Sovereign Debt --- International Lending and Debt Problems --- Finance --- International economics --- Public finance & taxation --- Debt relief --- Debt service --- Public debt --- Debt service ratios --- Debt reduction --- Asset and liability management --- External debt --- Debts, External --- Debts, Public --- Central African Republic