How did heavily indebted poor countries become heavily indebted? Reviewing two decades of debt relief

The paradox of debt is that heavily indebted poor countries (HIPCs) became heavily indebted after two decades of debt relief efforts. Average policies in HIPCs 1980-97 were worse than other less-developed countries (LDCs), controlling for income. Terms of trade and wars do not show a different trend in HIPCs than in non-HIPC LDCs. Financing HIPCs shifted away from private and bilateral nonconcessional sources toward International Development Assistance and other multilateral concessional financing-but this implicit form of debt relief also failed to reduce net present value debt. The record is not encouraging for the success of current debt relief efforts.