ABSTRACT
In 1996, the Highly Indebted Poor Countries initiative was launched to help resolve the problems of the poorest countries that faced considerable difficulties in servicing their external debt. The Cologne Debt Initiative aims ‘to reinforce the initiative so as to enhance the prospects for a robust and lasting exit for qualifying countries from recurrent debt problems’. It consists of five parts: conditionality or complementary measures, procedural suggestions, a reassessment of the criteria for potential eligibility, the volume of debt relief, and the financing of the package. According to the Cologne Debt Initiative, debt relief should be conditional on major and continuing reforms in debtor countries. The Cologne Debt Initiative would be financed by interest income and the interest on proceeds of the sale of up to 10 million ounces of the International Monetary Fund’s gold reserves. There is a role for the G7 in economic development because trade liberalisation has positive public repercussions.
