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...

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...

Poor countries will remain vulnerable to external shocks from export prices or from natural disasters for some time. Indeed, the lowest income countries have an even higher incidence of such adverse events than other developing countries and tend to suffer larger damages when they occur.