The HIPC programme is subject to conditions similar to those of International Monetary Fund (IMF) and World Bank loans, which require structural adjustment reforms, sometimes including the privatization of public services, including water and electricity. To qualify for irrevocable debt cancellation, countries must also maintain macroeconomic stability and satisfactorily implement a poverty reduction strategy for at least one year. In an effort to reduce inflation, some countries have been under pressure to cut spending in the health and education sectors. While the World Bank considers the HIPC initiative a success, some scientists are more critical of it. [5] One of the UN`s sustainable development goals, in particular Goal 17, is to “assist developing countries in achieving long-term debt sustainability by taking coordinated action to promote debt financing, debt cancellation and debt restructuring.” This will help poor countries reduce “debt difficulties”. [7] Inflation, the reduction in the nominal value of money, reduces the real value of debt. While lenders take inflation into account when setting the terms of a loan, unexpected increases in the inflation rate lead to an outright write-off of the debt. DCCs offer borrowers a flexible way to protect themselves against a range of events that could compromise their ability to pay off debts. They also allow borrowers to buy only the protection they need because of their financial situation and outstanding debt. As a result, Debt Cancellation Contracts (DCCs) and Debt Suspension Agreements (DSAs) are often a more appropriate form of borrower debt coverage than credit insurance contracts.

It remains to be seen whether external capitalization will again be on the table to put an end to group lending. There may be a few cases where debt capitalization is still preferable to debt cancellation. There is hope that the tax office will clarify how BQ 15/01 (income tax: tax evasion and debt capitalization) will be applied after the introduction of these rules, if any. The argument put forward is that while the new rules do not generate debt cancellation income, debt capitalization instead of forgiveness cannot be considered tax avoidance, although the declaration may remain relevant for situations that do not fall within the scope of the new debt cancellation rules. At present, the most common alternatives to debt cancellation in cases where debt cannot be paid are debt indulgence and restructuring. Leniency means that interest payments (possibly overdue) will be awarded as long as payments are restored. However, there is no reduction in capital. It should be noted that for the above scenarios (c) to (e) (i.e.).