Debt relief is back. Again. The “once-in-a-generation” debt cancellation of 15 years ago has returned to the agenda as indebted countries struggle to finance their response to Covid-19. Suspending collection of debt repayments is one practical thing – among others – that rich countries can do relatively quickly to free up money for poor countries during this crisis.
Hidden away in the annex to the G20 and Paris Club’s April communiqué (PDF) is a deal on the table similar to 15 years ago: a suspension of interest payments if the proceeds are spent on something ‘good’.
But this time around things are different – the International Financial Institutions (IFIs) have an opportunity to get the monitoring process right. They should put less emphasis on complex, intrusive expenditure tracking systems, and use the aligned incentives that a real crisis brings to help build trust between state and society.
Read the full blog here.
This blog first appeared on the ODI site.
Author: Bryn Welham and Mark Miller, ODI.
Image courtesy of allispossible.org.uk via Flickr.
The views are those of the author and not necessarily those of ETTG.