The HIPC Initiative and China’s Emergence as a Lender: post hoc or propter hoc

Tito Cordella, Maia Cufre and Andrea Presbitero

No 19895, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Twenty years after the Heavily Indebted Poor Countries (HIPC) debt relief initiative, debt levels in low-income countries are rising again, renewing sustainability concerns. The prevailing view suggests that China and other emerging lenders exploited the HIPC initiative to expand lending. Using a synthetic control method to generate a counterfactual, we find that, contrary to this narrative, China and other emerging lenders reduced net lending after debt relief; only multilateral creditors increased it. Furthermore, we find no support for the claim that debt relief encouraged lending to political allies. Overall, debt relief seems to have had limited influence on subsequent lending patterns.

Keywords: Sovereign debt; International lending; China; Debt relief; Geoeconomics (search for similar items in EconPapers)
JEL-codes: F14 F60 I18 (search for similar items in EconPapers)
Date: 2025-01
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