Eco 203 Principles of Macroeconomics Final Paper

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Benefits of Debt Cancellation
And
Agricultural Pricing Policies
R. Yarbrough
ECO 203 – Principles of Macroeconomics
May 31, 2010
Introduction
This paper will discuss the benefits of debt cancellation as formulated by the World Bank and the International Monetary Fund. In addition, further analysis outlined herein will answer the question as to whether the debts of 18 very poor countries were indeed cancelled as projected during the 2006 IMF annual meeting. Also, agricultural pricing policies will be discussed herein. Benefits of Debt Cancellation

The International Monetary Fund (IMF) is an organization that oversees the world’s financial system using macroeconomic polices of its member countries. It’s main objective is stabilizing international exchange rates and facilitating development through the enforcement of libral economic policies on other countries (mainly poorer countries) as a condition for loans, restructuring or financial aid. The headquarters is located in Washington, DC. (IMF, 2010)

The IMF’s HIPC (Heavily Indebted Poor Country) Iniative is a comprehensive approach to debt reduction to ensure that no poor country faces a debt burden it cannot manage. The HIPC Initiative began in 1996 by the IMF and World Bank. Since that time, the international financial community, have worked together to reduce to sustainable levels the external debt burdens of the most heavily indebted poor countries. According to the IMF, as of January 2010, debt reduction packages under the HIPC initiative have been approved for 35 countries – 29 of them in Africa. (IMF, 2010)

In 2005, the United Nations Millennium Development Goals were added to the HIPC Initiative as a supplement to allow for 100 percent relief on eligible debts by three mulilateral instriutions – the IMF, the World Bank, and the Afican Development Fund for countries completing the HIPC Initiative process. In 2007, the InterAmerican Development Bank decided to provide additional beyond...
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