Point, the country sets out to implement reforms and achieve social targets which are necessary to reach Completion Point where full debt relief in line with the settlements made at Decision Point is granted. In December 2014, the IMF reported that the enhanced HIPC Initiative and the MDRI had led to a 2.5 percentage point increase in poverty-reducing spending between 2001 and 2013 in recipient countries. This represents a total cost to creditors of US$116.1 billion (present values for both the enhanced HIPC Initiative and the MDRI at the end of 2013) (IMF, 2014), which equals approximately 20 percent of the total GDP in all HIPCs in 2013 (World Bank, 2015).

Debt relief may affect child health through various channels. There may be increases in health expenditures and improved efforts to strengthen health-service delivery as debt-servicing costs go down (e.g. Chauvin & Kraay, 2005; Cassimon, Van Campenhout, Ferry, & Raffinot, 2015). These effects may be strongest for the poor and vulnerable, for whom public expenditures and health-service delivery are less likely to merely substitute for private expenditures and delivery. If debt relief has an impact on other aid flows to debt-ridden and poor countries, we may see health effects in line with what is recorded in the literature on foreign aid and health (e.g. Powell, 2003; Gyimah-Brempong, 2015). Also, the debt overhang hypothesis, which stipulates that high debt may be seen as a high tax on investment and reform, (Krugman, 1988; Sachs, 1989) suggests that countries suffering from high debt may see increased investment and economic growth from debt relief, which, in turn, may have a positive impact on child health (e.g. Clement, Bhattacharya, & Nguyen, 2005; Johansson, 2010). Additionally, improvements in child health from HIPC debt relief through these channels may be linked to the emphasis on and strong oversight of pro-development policies in HIPCs at the different stages of the initiative.

The impacts of debt relief in general and the HIPC Initiative in particular on child health are not well known. Thomas and Giugale (2015) show that the general economic and social development in African HIPCs has been positive since the initiative was rolled out and Marcelino and Hakobyan (2014) argue that economic growth has gone up after HIPC debt relief. In a World Bank report on HIPC debt relief, Schmid (2009) finds that the infant mortality rate declines after a HIPC reaches Decision Point of the program. However, this study relies on country-level data on child health and was performed only a few years after the initiative came into effect. There may thus be problems with confounding factors which are difficult to account for in cross-country analyses. There are also drawbacks with the analysis in Schmid (2009) related to the relatively short time frame. In the same report Crespo Cuaresma and Vincelette (2009) find increases in educational attainment and expenditures after HIPC Decision and Completion Points. Again, however, there are concerns with regard to endogeneity and the short time frame of the analysis, and we currently lack reliable knowledge and evidence of the social effects of debt relief.

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