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Actually debt forgiveness has been a standard part of aid to developing countries for decades.

It turns out not to have solved anything. There are several economists who have attempted to explain why this is so.

One of the easiest to read is William Easterly who has two books on the subject.

Joseph Stiglitz, Paul Collier, Ha-Jung Chang and Dani Rodkrik have also written about this. They are all critical of IMF and WB policies, but disagree about the main reasons for continued failure and what to do about it.

It seems that graft by leaders and the knowledge that the country will be bailed out, once again, in the future lead to poor use for the loans.

Policies not Politics
---- Daily Landscape

by rdf (robert.feinman@gmail.com) on Mon Dec 15th, 2008 at 11:52:19 AM EST
What countries were forgiven free lately? How do you tell what is not working, or what is not working worse? Debt forgiveness to poor nations must still be the best charity possible. How else can those nations get a real chance to solve their problems by themselves? Modern debt weights heavier on them than tributes to Tchengis Khan.
by das monde on Wed Dec 17th, 2008 at 05:06:42 AM EST
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"Debt forgiveness" is a misnomer. What happens is that the original debtee recognises it's never going to get its full value reutrn, so cuts the loss by selling on to another debtee for cents on the dollar.

The debt is forgiven as far as the original is concerned, but the full value is still owed to the purchasor of the debt.

keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Wed Dec 17th, 2008 at 10:41:00 AM EST
[ Parent ]

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