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Forgive Debt, but Keep Lending

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Author Info
Daniel Cohen
Pierre Jacquet
Helmut Reisen

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Abstract

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 shocks occur, to minimise moral hazard and strengthen debt sustainability

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File URL: http://dx.doi.org/10.1787/243721887467
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Paper provided by OECD, Development Centre in its series OECD Development Centre Policy Insights with number 44.

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Date of creation: Apr 2007
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Handle: RePEc:oec:devaac:44-en

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