Policy Selectivity Foregone: Debt and Donor Behavior in Africa

Birdsall, Nancy; Claessens, Stijn; Diwan, Ishac

doi:10.2139/ssrn.385741

Cited by 30 publications

(38 citation statements)

References 13 publications

(12 reference statements)

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Furthermore, once they distinguish between the different types of creditors, they find that in the case of HIPCs multilateral creditors appear more generous than bilateral creditors. Earlier, Birdsall, Claessens, and Diwan (2002) studied the determinants of net transfers for a panel of 37 poor countries (mostly HIPCs), and (continued…)…”

Section: Introductionmentioning

confidence: 99%

Debt Overhang or Debt Irrelevance? Revisiting the Debt Growth Link

Cordella

Ricci²,

Ruiz-Arranz³

2005

IMF Working Papers

View full text Add to dashboard Cite

This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate. Do Highly Indebted Poor Countries (HIPCs) suffer from a debt overhang? Is debt relief going to improve their growth rates? To answer these important questions, we look at how the debt-growth relationship varies with indebtedness levels and other country characteristics in a panel of developing countries. Our findings suggest that there is a negative marginal relationship between debt and growth at intermediate levels of debt, but not at very low debt levels, below the "debt overhang" threshold, or at very high levels, above the "debt irrelevance" threshold. Countries with good policies and institutions face overhang when debt rises above 15-30 percent of GDP, but the marginal effect of debt on growth becomes irrelevant above 70-80 percent. In countries with bad policies and institutions, overhang and irrelevance thresholds seem to be lower, but we cannot rule out the possibility that debt does not matter at all. JEL Classification Numbers: F34; O40, C23

show abstract

Section: Introductionmentioning

confidence: 99%

Debt Overhang or Debt Irrelevance? Revisiting the Debt Growth Link

Cordella

Ricci²,

Ruiz-Arranz³

2005

IMF Working Papers

View full text Add to dashboard Cite

show abstract

“…10 Such lack of selectivity of both the IMF and the World Bank is confirmed by the results obtained in the case of foreign aid (see, for example, Burnside and Dollar 2000;Birdsall et al 2002;Marchesi and Missale 2004).…”

Section: Why Do Agreements Continue?mentioning

confidence: 83%

Prolonged Use and Conditionality Failure: Investigating IMF Responsibility

Marchesi¹,

Sabani²

2007

Advancing Development

View full text Add to dashboard Cite

Since the 1970s, prolonged use of resources by the IMF has consistently expanded, among both low-and middle-income countries. Overall, this phenomenon suggests a lack of effectiveness of Fund supported programmes. In the literature conditional lending failure has been explained by looking both at the characteristics of the borrowing countries (demand-side factors) and at the possible influence of IMF specific interests (supply-side factors). Among the latter it has been suggested that noncompliance with conditionality might be attributed to the lack of credibility of the IMF threat of interrupting financial assistance in case of policy slippages. In this paper we critically review this literature and we propose a novel explanation, according to which it is the repeated nature of the IMF involvement, together with the fact that the Fund acts simultaneously as a lender and as a monitor (and as an advisor) of economic reforms, that weakens the credibility of the IMF threat. Specifically, we argue that …/

show abstract

“…Unfortunately, history produces no evidence that this class of swaps increases net transfers to recipient countries (Birdsall et al 2003;Ndikumana 2004). And there is no clear reason why it would happen now.…”

Section: Impact On Net Transfers and Fiscal Spacementioning

confidence: 99%

“…On the one hand, a large debt burden has been shown to bring about a breakdown in selectivity of donor interventions as donors provide new money in order to allow the country to stay current on debt service payments, rather than for development purposes. This has been denoted as 'defensive lending' (Birdsall et al 2003). Debt relief that leads to a disappearance of the debt overhang may restore donor selectivity as the need for 'defensive lending' abates.…”

mentioning

confidence: 99%

Assessing debt‐to‐health swaps: a case study on the Global Fund Debt2Health Conversion Scheme

Cassimon¹,

Renard²,

Verbeke³

2008

Tropical Med Int Health

View full text Add to dashboard Cite

SummaryThe Debt2Health Conversion Scheme of the Global Fund to Fight AIDS, Tuberculosis and Malaria is used to reassess a range of recent initiatives that propose debt relief in exchange for spending in the health sector. The experience with debt swaps in the mid 1990s was far from positive, and recent improved insight in the economics of debt relief suggests extreme caution. We argue that the recent spade of debt swap proposals, even if targeting countries and debt titles that fall outside current major international debt relief mechanisms, share most of the design faults of previous initiatives. Proposals such as Debt2Health do not constitute efficient vehicles to increase net transfers to poor countries, to reduce the economic disadvantages of indebtedness, or to strengthen public health systems of partner countries. For debt relief to constitute a valuable mechanism to provide aid, it should be designed as a large-scale and comprehensive operation, with spending earmarked to broad country-established priorities, and reinforce rather than undermine national implementation systems.

show abstract

Policy Selectivity Foregone: Debt and Donor Behavior in Africa

Abstract: meeting for their comments. They thank François Bourguignon and three referees for their extensive comments, Ying Lin (World Bank) for his excellent work with the data, and Brian Deese for other research help. The article was previously entitled: "Will HIPC Matter? The Debt Game

Cited by 30 publications

References 13 publications

Debt Overhang or Debt Irrelevance? Revisiting the Debt Growth Link

Debt Overhang or Debt Irrelevance? Revisiting the Debt Growth Link

Prolonged Use and Conditionality Failure: Investigating IMF Responsibility

Assessing debt‐to‐health swaps: a case study on the Global Fund Debt2Health Conversion Scheme

Contact Info

Product

Resources

About