In this paper they argue that cancelling the debt of the poorest countries was a good thing, but that it should not imply that the debt instrument should be foregone. Debt and debt cancellations are indeed two complementary instruments which, if properly managed, perform better than either loans...

In this paper we examine whether absorptive capacity can constitute sufficient justification for rejecting the proposal of a large aid increase to support the ‘big push’. We argue that the probability of a poverty trap exists for many countries, in particular the least developed countries...

Suppose a DAC donor earmarks $1 billion of taxpayers’ money for official development assistance (ODA). The donor may use two instruments as an outright grant or in combination with a market loan to produce a concessional loan of $2 billion with a percentage grant element of 50 per cent. Many...

One of the particular features of poor countries’ economies is their volatility, due mostly to their dependence on commodities. The paper shows that this volatility is a prime factor behind the debt crises of the poorest countries. It advocates the adoption by donors of a new lending...