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An assessment of debt-for-education swaps. Case studies on swap initiatives between Germany and Indonesia and between Spain and El Salvador

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  • Cassimon, Danny
  • Essers, Dennis
  • Renard, Robrecht

Abstract

In the light of worldwide commitments to meet global basic learning needs made at the 1990 United Nations Conference on Education for All (EFA) in Jomtien, the 2000 World Education Forum in Dakar and the 2000 United Nations Millennium Summit in New York, UNESCO has established a Working Group on Debt Swaps for Education which has met on two occasions so far, in 2006 and 2007. Drawing on experiences of bilateral donors such as Spain and Germany, this UNESCO Working Group is now promoting debt-for-education swaps, constructions whereby external debt is cancelled by the creditor in exchange for the debtor government’s commitment to mobilise domestic resources for education sector spending. The experience with debt swaps in the mid 1990s was, however, far from positive, and recent improved insight in the economics of debt relief suggests extreme caution. In reviewing debt-for-education swaps between Germany and Indonesia and between Spain and El Salvador, this paper examines to what extent these second-generation debt swaps differ from their contested predecessors. We argue that, while the Paris Declaration’s principles of policy and system alignment appear to have been fairly well implemented on education sector level in both case studies considered, it is mainly the macro-economic nature of such swaps that remains problematic. For debt relief to hold at least some promise of translating into an efficient and effective instrument of development, it should be large and comprehensive, as in the case of the HIPC Initiative and its successor the MDRI.

Suggested Citation

  • Cassimon, Danny & Essers, Dennis & Renard, Robrecht, 2009. "An assessment of debt-for-education swaps. Case studies on swap initiatives between Germany and Indonesia and between Spain and El Salvador," IOB Working Papers 2009.03, Universiteit Antwerpen, Institute of Development Policy (IOB).
  • Handle: RePEc:iob:wpaper:2009003
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    Citations

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    Cited by:

    1. Danny Cassimon & Dennis Essers & Karel Verbeke, 2015. "What to do after the clean slate? Post-relief public debt sustainability and management," BeFinD Working Papers 0103, University of Namur, Department of Economics.
    2. Vatcharin Sirimaneetham, 2021. "Fiscal policy options to build forward better," MPDD Working Paper Series WP/21/07, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
    3. Danny Cassimon & Dennis Essers & Achmad Fauzi, 2014. "Indonesia's Debt-for-Development Swaps: Past, Present, and Future," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 50(1), pages 75-100, April.
    4. Danny Cassimon & Martin Prowse & Dennis Essers, 2014. "Financing the Clean Development Mechanism through Debt-for-Efficiency Swaps? Case Study Evidence from a Uruguayan Wind Farm Project," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 26(1), pages 142-159, January.
    5. Hiroshi Ito & Ryosuke Sekiguchi & Toshiyuki Yamawake, 2018. "Debt swaps for financing education: Exploration of new funding resources," Cogent Economics & Finance, Taylor & Francis Journals, vol. 6(1), pages 1563025-156, January.
    6. repec:nam:befdwp:3 is not listed on IDEAS
    7. Gianni Vaggi & Luca Frigerio, 2021. "Foreign debt sustainability and human development in Sub Saharan Africa," DEM Working Papers Series 203, University of Pavia, Department of Economics and Management.
    8. Cassimon, Danny & De Herdt, Tom & Verbeke, Karel, 2015. "On the creation of Adam: what debt relief means for education in the DRC," IOB Working Papers 2015.06, Universiteit Antwerpen, Institute of Development Policy (IOB).

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