Lending to the Poorest Countries: A New Counter-Cyclical Debt Instrument

One of the particular features of poor countries' economies is their volatility, due mostly to their dependence on commodities. The paper shows that this volatility is a prime factor behind the debt crises of the poorest countries. It advocates the adoption by donors of a new lending instrument...

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Bibliographic Details
Main Author: Cohen, Daniel (Author)
Other Authors: Djoufelkit-Cottenet, Hélène (Contributor), Jacquet, Pierre (Contributor), Valadier, Cécile (Contributor)
Format: Electronic eBook
Language:English
Published: Paris OECD Publishing 2008
Series:OECD Development Centre Working Papers
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Online Access:Volltext
Summary:One of the particular features of poor countries' economies is their volatility, due mostly to their dependence on commodities. The paper shows that this volatility is a prime factor behind the debt crises of the poorest countries. It advocates the adoption by donors of a new lending instrument: the countercyclical loan (CCL). The key idea is to reduce the grace period of a typical concessional loan, from 10 to 5 years, and to keep the remaining grace periods as an asset that the country can draw upon, when a bad shock occurs. If no such bad shocks happen, or infrequently enough, the "floating grace" is redeemed to the country at the end of the loan as a repayment in advance without penalties
Physical Description:1 Online-Ressource (45 Seiten) 21 x 29.7cm
DOI:10.1787/242606541087

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