While researching last night's report on the IMF working papers, showing no proven correlation between aid and growth, I came across this interesting piece from one of the authors about debt relief. I am now on my way to Edinburgh and will be blogging on arrival (and hopefully doing that other, antiquated form of discourse known as broadcasting). In the meantime, consider Rajan's debt thinkpiece today's recommended reading. Owen's blog has already trashed the technicalities of his paper on aid though (says Owen). On debt Rajan writes...
"If a poor country has no access to private markets, and the investment climate is bleak, financial distress or debt overhang are unlikely to result from high debt. A focus on debt forgiveness—as opposed to the net incremental resources available in the short run (that is, additionality)—is misplaced. Debt forgiveness makes sense if it generates more resources from the private sector, but the country authorities must have the incentive to use resources well and the private sector to lend responsibly. Interestingly, this means that depending on the country’s situation, the status quo, as well as any one of the three proposals I outlined, could be the best approach for the country."
Anyway the IMF's director of research achieved something rare with his draft paper yesterday: to get the Fund's press office to stage an impromptu public briefing in response to the FT and Newsnight. To read the transcript of the press conference, just click here.
