Low Income Countries and External Public Financing: Does Debt Relief Change Anything?
Marin Ferry (),
Marc Raffinot and
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Baptiste Venet: LEDa - Laboratoire d'Economie de Dauphine - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres, DIAL - Développement, institutions et analyses de long terme
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Low income countries (LICs) generally have very little access to the international financial markets. Inthe 1990s, bilateral creditors and international financial institutions started granting LICs debt reliefunder the Heavily Indebted Poor Countries (HIPCs) initiatives and continued with the more recentMultilateral Debt Relief Initiative (MDRI). Have these debt relief initiatives led official and privatecreditors to change their lending policy with respect to beneficiary countries? This paper addresses thisquestion using difference-in-differences methodology. Our findings tend to show that official lenderstighten their HIPC financing policy, shortening grace and maturity periods, and reducing the grantelement on new loans once debt relief has been provided. We also find that beneficiary governmentsmanage to diversify their financing sources by borrowing more from private creditors once they havecompleted the HIPC process and have received additional debt cancellations under the MDRI.
Keywords: Debt Relief; low-income countries; access to financial markets; concessionality; Pays à faible revenu; Annulation de dette; Financement international; Concessionalité (search for similar items in EconPapers)
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Working Paper: Low Income Countries and External Public Financing: Does Debt Relief Change Anything? (2016)
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