Forgive Debt, but Keep Lending

Daniel Cohen, Pierre Jacquet and Helmut Reisen
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Pierre Jacquet: OECD

No 44, OECD Development Centre Policy Insights from OECD Publishing

Abstract: Cancelling of poor-country debt does not mean that the best way to give aid is through grants only. Aid through loans may often prove superior, provided that it maintains debt sustainability. A new scheme for soft loans is suggested, with higher interest rates and cancellation provisions if bad shocks occur, to minimise moral hazard and strengthen debt sustainability

Date: 2007-04-01
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Persistent link: https://EconPapers.repec.org/RePEc:oec:devaac:44-en

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