Can HIPC Reduce Poverty in Tanzania?

While growth has increased in Tanzania during the past five or six years, it is still too low to have a visible impact on poverty. Indeed, recent evidence suggests that the amount of both income and non-income poverty are roughly the same as they were a decade ago. Since debt relief provided under HIPC will free government resources, the initiative will potentially help reduce poverty through larger government expenditures on social sectors. However, it is unlikely that Tanzania will be able to reach the situation projected in the Decision Point document; projections are extremely optimistic, and deviations from these are likely to lead to a rapid accumulation of debt, so debt sustainability – as reflected in the debt-to-export ratio – will not be met.