The amount of debt considered sustainable was decided by looking at what middle income Latin American countries actually paid to service their debt. The concept did not take into account the fact that many Latin American countries paid their debt at the expense of the welfare of their people, paying more than they should have. The percentage of exports that went to debt service then became the standard for what low income countries were considered able to pay. Too long a wait Eligible countries have to establish a track record of economic reform for at least three years before receiving bilateral relief and six years before receiving multilateral relief. The HIPC Initiative requires countries that want debt relief to carry out SAPs.
SAPs can reform economies in positive ways but can also contribute to poverty.
The cut-off date is the date the country first requests assistance from the Paris Club. Debt that builds up after this date is not eligible for reduction under the HIPC Initiative. Caritas International is a network of 146 national relief, development, and social service organizations. This article is adapted from their publication Putting Life Before Debt.