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# Relieving an improvished country of its debt would seem to

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Relieving an improvished country of its debt would seem to [#permalink]

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18 Apr 2011, 15:21
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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?

[Reveal] Spoiler:
B

2:
[Reveal] Spoiler:
D

Thanks,
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Re: Heavily Indebted Poor Countries [#permalink]

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19 Apr 2011, 00:15
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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!
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Re: Relieving an improvished country of its debt would seem to [#permalink]

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05 Oct 2014, 08:32
DmitryFarber wrote:
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!

Hi Dmitry,
In the first question, why is option E not preferred over option B?
the first 3 paras of passage only talk about HIPC . 4th talk about insufficiencies.
Also , in option B, the scope is broader.

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Re: Relieving an improvished country of its debt would seem to [#permalink]

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08 Oct 2014, 23:27
Careful--the HIPC is mentioned in the first 3 paragraphs, but the problems cited are not necessarily with HIPC itself. For instance, look at paragraph 3. The problem is the lack of a private sector--this is not the HIPC's fault. The broadness of B is exactly what makes it correct. The passage is about more than the HIPC; it's about the general problem of trying to solve impoverished countries' problems through debt relief. So is the HIPC insufficient? Absolutely, but so perhaps are other programs of the same kind. There is more to the problem than mere debt relief.
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Re: Relieving an improvished country of its debt would seem to [#permalink]

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09 Apr 2016, 11:22
DmitryFarber wrote:
Careful--the HIPC is mentioned in the first 3 paragraphs, but the problems cited are not necessarily with HIPC itself. For instance, look at paragraph 3. The problem is the lack of a private sector--this is not the HIPC's fault. The broadness of B is exactly what makes it correct. The passage is about more than the HIPC; it's about the general problem of trying to solve impoverished countries' problems through debt relief. So is the HIPC insufficient? Absolutely, but so perhaps are other programs of the same kind. There is more to the problem than mere debt relief.

DmitryFarber

Which of the following 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 Very Poor Countries
D. The Inherent Flaws in Debt Relief Programs
E. HIPC: Well-Meaning, but Insufficient

Quote:
However, the HIPC has strict rules that sharply limit this spending. In some cases, 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.

This explains that HIPC flaw. So i believe D and B are closer choices and D is apt as much as B. Please explain?
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Re: Relieving an improvished country of its debt would seem to [#permalink]

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14 Mar 2017, 04:43
Main Point is the last sentence of the passage

Q1. Only B fully reflects the main point

Q2. I personally was touched by D because in the passage the corruption was related to government but not private sector
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Relieving an improvished country of its debt would seem to [#permalink]

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19 Apr 2017, 22:09
GMATNinja, Need your help here for the Q#1

I summarized the passage as below.

1. Introduction and purpose of MDRI's initiative- HIPC
2. What nations needs to do with the available/new fund i.e. Spending wisely.
3. Difficulties in implementing HIPC
4. With HIPC in action, Nation in debt needs to overcome the situation with its own policies.

The forth passage explicitly made me choose Option E.

Can you please highlight if there is any flaw in my understanding of this passage and how B is a correct answer..
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Re: Relieving an improvished country of its debt would seem to [#permalink]

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24 Apr 2017, 08:57
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RMD007, you probably won't be terribly thrilled with my answer: this is a non-official question, so there's some room for debate. The GMAT spends $1500-$3000 developing each question, and even the very finest test-prep companies can't compete.

In this case, I think we could make a case for either (B) or (E) in question #1. Yeah, the last paragraph of the passage doesn't actually use the terms "HIPC" or "MDRI", but it's clearly referencing the limitations of debt relief programs. It's fair to say that the whole passage discusses why these debt relief programs may be insufficient, as suggested by (E). And sure, the passage also discusses the challenges of implementing debt relief, and reasons why it might not have the intended consequences -- so (B) is also defensible.

Again, official GMAT questions won't leave much room for debate at all. The correct answers are unambiguous -- and I don't think that's the case here, unfortunately.
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Re: Relieving an improvished country of its debt would seem to   [#permalink] 24 Apr 2017, 08:57
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