The Role Of HIPC In The Development Of Ghana’s Economy

The World Bank and the International Monetary Fund (IMF) launched the Debt Initiative forHeavily Indebted Poor Countries (HIPC) Initiative in1996and was further expanded in late1998(Enhanced HIPC Initiative), which generated a framework for all creditors, includingmultilateral creditors, to provide debt relief to the world’s poorest and most heavily indebtedcountries, and thereby reduce the constraint on economic growth and poverty reduction imposedby the debt build-up in these countries.Ghana took the decision to access the Highly Indebted Poor Country (HIPC) Initiative inMarch2001.In February2002, Ghana reached decision point and in July2004, reachedcompletion point. The total relief from the HIPC Initiative is USD3.7billion, spread over a20year period. This amount represents the relief from Ghana’s multilateral, bilateral andcommercial creditors. The argument was that HIPC spending will help to improve education andhealth services delivery, speed up rural electrification, enhance rural agriculture, feeder roadsconstruction and rehabilitation, rural water and sanitation, among others.This study was designed to establish whether the HIPC funds that were release for povertyreduction indeed have an impact in the economy and at what rate it did. The researchexperimental focused on identifying whether the HIPC releases and after the release have animpact in the development of the Ghana’s economy.The study showed that after the country joined the HIPC initiative, the initiative played animportant role in the development of the economy by reducing poverty rate quiet significantlyand also growth rate. These findings were interpreted and discussed in the context of literatureand a number of implications and recommendations were drawn.