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Independent research for global prosperity

Views from the Center

CGD experts offer ideas and analysis to improve international development policy. Also check out our Global Health blog and US Development Policy blog.

 

A construction worker at an unfinished building in China. Curt Carnemark, World Bank photo.

With a Debt Crisis Looming, Researchers Who Estimated China’s “Hidden” Lending Respond to Their Critics

Last year, economists Sebastian Horn, Carmen Reinhart, and Christoph Trebesch put forward estimates of the Chinese government’s external (“overseas”) lending in a working paper. Their work was a landmark effort in a number of respects. Perhaps not surprisingly for a working paper, Horn et al. also attracted critics. In a new note for CGD, Horn et al. respond to this criticism.

A stock photo of a see-through piggy bank. Adobe Stock.

A Reckoning for China’s Opaque Overseas Lending

We are so accustomed to the Chinese government’s lack of transparency that the opaqueness of China’s overseas loans seems unremarkable at this point. But as we face what inevitably looks like a global debt crisis, one that is likely to hit low-income countries particularly hard, a clear accounting of the scale of the problem is critical. 

Stacks of US dollars. Adobe Stock

More Than $1 Trillion in MDB Firepower Exists as We Approach a COVID-19 “Break the Glass” Moment

In retrospect, the scale up in MDB financing during the 2008-2010 crisis, though significant, now looks conservative as we consider the potential scale of damage from the current COVID-19 pandemic. To put the question bluntly, if the human and economic devastation follows a worst-case scenario, just how much could the MDBs do to respond? We attempt to answer that question by assessing the legal, rather than prudential, constraints on MDB lending.

A worker at a power station in Kabul. Photo by Graham Crouch, World Bank

5 Principles on the Uses and Misuses of Debt Relief to Address the Coronavirus Pandemic

Debt relief for low-income countries is on the table of measures to consider for coronavirus response. The imperative right now is to get cash to LICs as quickly as possible. Suspending some debt service payments may be a good first step in freeing up some budget space for new spending. Beyond that, protracted debt-relief negotiations with multilateral and commercial creditors right now could be a distraction at best but could also actively undermine the ability of institutions like the World Bank to offer new financing for crisis response.

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