Arbeitspapier
Debt Sustainability in Low-Income Countries: The Grants versus Loans Debate in a World without Crystal Balls
When allocating their aid budget, development agencies need to decide whether to give outright grants or use concessional loans that blend a grant and credit element. Theory suggests that the degree of concessionality should be negatively correlated with debt sustainability. Several donors use the World Bank/IMF Debt Sustainability Framework to guide their aid decisions. They give loans to low-risk countries, a blend of loans and grants to medium-risk countries, and only grants to high-risk countries. The paper shows that there are problems with this approach and proposes an alternative allocation mechanism based on GDP-indexed concessional loans.
- Language
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Englisch
- Bibliographic citation
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Series: FERDI Working Paper ; No. P120
- Classification
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Wirtschaft
International Monetary Arrangements and Institutions
International Lending and Debt Problems
- Event
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Geistige Schöpfung
- (who)
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Panizza, Ugo
- Event
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Veröffentlichung
- (who)
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Fondation pour les études et recherches sur le développement international (FERDI)
- (where)
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Clermont-Ferrand
- (when)
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2015
- Handle
- Last update
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20.09.2024, 8:21 AM CEST
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Panizza, Ugo
- Fondation pour les études et recherches sur le développement international (FERDI)
Time of origin
- 2015