Find all School-related info fast with the new School-Specific MBA Forum

It is currently 18 Sep 2014, 08:18


GMAT Club Daily Prep

Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

for You

we will pick new questions that match your level based on your Timer History

Your Progress

every week, we’ll send you an estimated GMAT score based on your performance


we will pick new questions that match your level based on your Timer History

Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.

Events & Promotions

Events & Promotions in June
Open Detailed Calendar

Relieving an improvished country of its debt would seem to

  Question banks Downloads My Bookmarks Reviews Important topics  
Author Message
Joined: 10 Apr 2011
Posts: 37
Followers: 0

Kudos [?]: 3 [0], given: 7

Relieving an improvished country of its debt would seem to [#permalink] New post 18 Apr 2011, 14:21
Relieving an improvished country of its debt would seem to almost unavoidably help the citizens of that nation. Indeed, health care and education spending is now grater than debt service payments in many countries(HIPC) that have been granted partial debt relief by the Heavily Indebted Poor Countries Initiative launched by the International Monetray Debt Relief Initiative (MDRI). Several factors, however, have kept these programs from becoming truly transformational.

Forr a nation to qualify for the HIPC, it must have a level of debt that cannot be managed through traditional means. The removal of this enormous burden means that badly needed resources can go to programs that aid needy citizens, just as is intended. However, the HIPC has strict rules that sharply limit this spending. In some case, teachers are not hired and HIV/AIDS tests are not administered because the sudden spending might lead to macroeconomic instability. This is a paradox that must be confronted: poor nations need to spend money desperately but wisely.

A more daunting obstacle is tha lack of a private sector in many of the countries that are served by the HIPC. Property rights may be virtually non-existent, Without individuals and businesses willing and able to invest resources in their own country, progress can be glacial. Outside investors are forced to deal not with business partners as such, but with government agencies ranging from the inept to the murderously corrupt. There is no guarantee that funds meant for a hospital or school will ever find their way to the intended destination, whether because of corruption or the sheer difficulty of moving goods around in a place that is, as is so often the case in truly poor countries, at war.

Debt relief remains an important tool in reducing the terrible suffering that affects so many people in the underdeeveloped world. However, it is not enough to clean the slate and say ,"start anew". Without the willingness on the part of the governing body to allow its citizens to take part in their own development, and without the right balance of emergency spending and careful investment, unmanagement debt will return, as evidenced by nations that have been borrowing money faster than their debt can be relieved.

1. Which of the folloring titles best summarizes the contents of the passage?
A. Debt Relief as a Tool for increasing Private Investment in Impoverished Nations.
B. The difficulties of Implementing Debt Relief in Very Poor Countries
C. Obstacles to Channeling Aid to Needy Destinations in Vey Poor Countries.
D. the Inherent Flaws in Debt Relief Programs
E. HIPC: Well-meaning, but insufficient

2. Which of the following was not mentioned as a difficulty associated with debt relief?
A. long-term needs have to be addressed at the same time as more immediate one.
B. Nations that need debt relief are often in the midest of violent conflicts
C. Debt relief can swiftly be replaced by new debt.
D. Private investors in very poor countries are often corrupt.
E. The pace of development in poor nations can be extremely slow

1. I chose E since I found the disadvantage of HIPC from the last paragraph.

2. I chose B since I didn't find anywhere mentions "the midst of violent conflicts" from the passage. Or I probably am not very sure about the meaning of this phrase, can anyone explain this for me?

Answer 1:
[Reveal] Spoiler:

[Reveal] Spoiler:


Yvonne Hao

Expert Post
Manhattan GMAT Instructor
User avatar
Joined: 22 Mar 2011
Posts: 373
Followers: 131

Kudos [?]: 229 [0], given: 10

Re: Heavily Indebted Poor Countries [#permalink] New post 18 Apr 2011, 23:15
Expert's post
When you are given a general question such as #1, make sure that your response covers the entire passage, not just one portion. The passage is about difficulties with debt relief in general. It is not restricted solely to the HIPC initiative.

"In the midst of" basically means "in the middle of," so B is just saying that the countries in question are experiencing violence. This is mentioned at the end of paragraph 3. Corrpution is mentioned in the same paragraph, but only in reference to government agencies, not private investors.

I hope this helps!

Dmitry Farber | Manhattan GMAT Instructor | New York

Manhattan GMAT Discount | Manhattan GMAT Course Reviews | View Instructor Profile |
Manhattan GMAT Reviews

Re: Heavily Indebted Poor Countries   [#permalink] 18 Apr 2011, 23:15
    Similar topics Author Replies Last post
700 to 730 Its not as easy as it seems. clearwater 0 14 Oct 2013, 05:07
4 The debt crisis affecting many developing countries has had kapil1990 2 28 Oct 2012, 10:25
1 Experts publish their posts in the topic The debt crisis affecting many developing countries has had RohitKalla 13 06 Jul 2011, 09:42
Experts publish their posts in the topic Debts TheRob 5 09 Oct 2009, 12:34
got 700 relieved its over now hanu 8 18 Oct 2005, 05:23
Display posts from previous: Sort by

Relieving an improvished country of its debt would seem to

  Question banks Downloads My Bookmarks Reviews Important topics  

GMAT Club MBA Forum Home| About| Privacy Policy| Terms and Conditions| GMAT Club Rules| Contact| Sitemap

Powered by phpBB © phpBB Group and phpBB SEO

Kindly note that the GMAT® test is a registered trademark of the Graduate Management Admission Council®, and this site has neither been reviewed nor endorsed by GMAC®.