The Political Economy of the Enhanced HIPC-Initiative

Only three years after its endorsement bythe World Bank and the IMF, the HeavilyIndebted Poor Country (HIPC) – Initiativewas considerably altered and enhanced. Thispolicy shift can be explained as a resultof utility maximization behavior bynational and international politicians,international bureaucrats and NGO. Apolitico-economic model suggests that theoverall rise of HIPC default risk and thesymbolic value of the year 2000 have beenthe two major determinants of changes involume, eligibility, and conditionalityrequirements.