Pitfalls of debt reduction: A counterfactual case study of Zambia during the early 1990s

Is debt reduction a gift to future generations? The answer depends upon how indebted governments use the extra room for manoeuvre it confers upon them. The paper explores this issue through a historical counterfactual case study. In 1991 a new Zambian government was democratically elected on a reform platform that corresponded closely to donor/creditor prescriptions. The paper casts doubt on whether more substantial debt reduction at that time would have improved long-term prospects for the Zambian economy, increased public health and education spending, or strengthened the government's political accountability. This suggests, in turn, that it would probably have done little to improve prospects for future generations of Zambians. Copyright (C) 2000 John Wiley and Sons, Ltd.