This paper examines Ghana’s experience with external debt and debt relief measures, specifically, Ghana's experience with the Highly Indebted Poor Country (HIPC) initiative and the relevance to poverty reduction. The Ghana government’s attempt to improve its record on social development led to the HIPC initiative in February of 2001. The HIPC initiative is expected to free significant budgetary resources for Ghana’s poverty reduction strategy, hence enabling the country to implement the development goals set out in the PRSP. The paper examines the performance of the social sector reforms within the context of the Poverty Reduction Strategy Paper (PRSP). It must be stressed that the implementation of social reform programmes to solve these problems requires additional resources to those resources that are currently projected from domestic and donor sources. There is likely to be a resource-financing gap in the implementation of Ghana’s social development programmes, especially as it relates to expenditure. Indicatively, Ghana would require more money to implement social policies to alleviate poverty. A critical aspect of the paper would look at how sustainable Ghana’s debt is. Specifically, the paper would look at the extent to which a critical component of the debt, the debt service payable, is reduced so as to make Ghana’s debt service to GDP ratio 2% from year to year. And within the context of poverty reduction, the reduction in debt service payable would be

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