The first part of this book consists of three papers analyzing the debt problems of heavily indebted poor countries (HIPCs) in sub-Saharan Africa, focusing on debt overhang, sustainability, and impact on growth. These papers explore the linkage between external debt and economic performance and analyze the role of debt reduction in restoring sustained growth in low-income countries. Next, the book examines the existing mechanism to address debt problems and analyzes the modalities of the new HIPC Debt Initiative. Since the onset of the debt crisis in the early 1980s, which affected both middle- and low-income countries, the traditional mechanism for dealing with debt problems, including those of HIPCs, have been progressively liberalized, moving toward increasing the concessionality of external assistance. The final part of the book presents three papers on the institutional and policy determinants of private capital flows. The experience of middle-income countries that encountered severe debt problems in 1980s provides insights for HIPCs to shape their institutions to attract private capital, both domestic and foreign. There is a need to meet more fundamental conditions including law and order, secure property rights, enforceable contracts, a functional financial systems, and market-determined prices, particularly exchange and interest rates, although market size is important in attracting foreign direct investment. Key factors influencing FDI were found to be the GDP growth rate, the openness of the economy, and the variability of the real effective exchange rate.