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What does motivate lending and aid to the HIPCs?

  • Silvia Marchesi

    (University of Siena; University of Milano)

  • Alessandro Missale

    (University of Siena; University of Milano)

We examine both grants and net loans made to low income countries during the last two decades to understand the main reasons that motivated the behaviour of both donors and creditors. We find that the total amount of net transfers to HIPCs, as compared to non-HIPCs, have been increasing with their debt level. Greater net transfers have taken the form of net loans from multilateral organisations and grants in exchange for loans from bilateral institutions. This evidence thus suggests that HIPCs have kept receiving large amounts of resources just because of their high indebtedness, thereby supporting both the hypothesis of defensive lending and defensive granting.

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Paper provided by Centro Studi Luca d\'Agliano, University of Milano in its series Development Working Papers with number 189.

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Date of creation: 01 Aug 2004
Date of revision:
Handle: RePEc:csl:devewp:189
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