This paper provides a framework for discussion of the key issues that need to be taken into account in designing a forward-looking debt and borrowing strategy for low-income countries. Such a strategy has to support the development objectives of these countries, embodied in the Millennium Development Goals (MDGs), while maintaining debt sustainability to prevent costly debt crises in the future. The paper addresses these issues in the context of the existing international policy environment, including with regard to aid flows, and, in particular, does not reexamine the appropriateness of debt relief under the HIPC Initiative. Moreover, although the paper takes positions on several issues that are relevant to Fund surveillance and program design, it does not aim to bring closure on these issues at this stage. Instead, it is intended as an input into a series of workshops, some of which are being jointly sponsored by the Fund and the World Bank. The emerging consensus will be reflected in a joint Bank-Fund paper elaborating specific policy proposals in the fall of 2003.
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A 2003 study studied this question.