CGD was founded in 2001 in part because of the concern our founding chairman, Edward W. Scott Jr., had about the debt burden of the poorest countries. We are uniquely positioned to work on both the intellectual underpinnings of debt relief and the implementation of specific policies. The Center’s first book, Delivering on Debt Relief, by Nancy Birdsall and John Williamson helped to frame the debate and contributed to the structure of the financing arrangements for the Heavily Indebted Poor Countries Initiative (HIPC). Despite the impressive successes of HIPC/MDRI (Multilateral Debt Relief Initiative) in reducing poor-country debt, the issue remains vitally important―and a key part of CGD’s work.
Debt and difficult countries: Liberia, Nigeria, Zimbabwe
The Center’s work contributed directly to deals for Liberia and Nigeria. In 2009, former senior fellow Steve Radelet played a central role in helping to shape the arrangements for debt relief for Liberia and helped the country reach both HIPC decision point and a successful commercial buyback of $1.2 billion in debt at a 97 percent discount.
Senior fellow Todd Moss and president Nancy Birdsall provided a proposal and technical analysis that helped lead to a $30 billion debt relief deal for Nigeria.
Several critical countries including Sudan, Zimbabwe, Burma, and Somalia remain outside the existing debt relief mechanisms, but are likely to soon demand the attention of the international community. Moss is currently working in support of Prime Minister Morgan Tsvangirai on a debt relief strategy for Zimbabwe.
Debt sustainability and the lending policies of major creditors
CGD is currently investigating the possibility of preventing future odious debt by convening a working group led by John Williamson, Michael Kremer, and Seema Jayachandran. Under its innovative proposal, countries would refuse to recognize the enforcement of sovereign loans issued by regimes previously declared odious by an appropriate international body.
CGD is also conducting analyses of the future lending practices of the donor community toward HIPCs, with an eye toward proposals for reform as part of the IDA-16 replenishment negotiations starting in early 2010.