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CGD’s recent publication of my paper on improving the statistical definition of Official Development Assistance (ODA) brought me into contact with several people involved with the ongoing review of this issue. (For the history of that process see my previous post.) Those conversations have stimulated my thinking. They have also helped me appreciate that among the questions in play, the hottest is how to count loans in ODA—where “hot” is some blend of complicated and controversial.
I wrote about loans in my last post. But I focused on arguing against factoring the probability of default into the assessed financial value of a loan. Here, I’ll explain some other loan-related recommendations. In another post, I’ll talk about other questions.
There are no doubt a number of new realities created by the US Supreme Court’s decision this week to let stand a lower court ruling supporting hedge fund bond holders who refused to accept reduced payments after Argentina’s 2001 default.
We cheer for the African teams, so we’re a little conflicted with the USA-Ghana grudge match in the World Cup tonight. We harbor no illusions about USA’s chances to win the tournament. But at least we’ll have the electricity to watch it.
I never cease to be astonished by the amount of energy people put into claiming that Randomized Control Trials (RCTs) are the be-all and end-all of impact evaluation methods; nor at the energy people put into claiming that RCTs are marginal, costly, and a waste of time.
Not to be melodramatic, but the official system for counting foreign aid is in crisis. The longstanding mathematical rule determining whether a loan’s interest rate is low enough to qualify it as aid has gone out of sync with the times. The rule’s benchmark interest rate of 10% per year was reasonable when adopted in 1972, but not now. Today, wealthy governments can borrow below 3%, lend a couple percent higher, come in well under the 10% bar, and count the potentially profitable lending as aid.