New DAC Rules on Debt Relief – A Poor Measure of Donor Effort

Abstract:

The Development Assistance Committee (DAC) recently produced a long-awaited set of rules for how debt relief on loans should be scored as Official Development Assistance (ODA). Unfortunately, the rules suffer from a number of statistical problems: different measurement bases are mixed up even measuring the same loans; similar loans extended at different times are treated differently; loans can score as much as grants, even if partially or fully repaid; and more ODA can be scored for forgiveness than borrowers actually owe. The one unifying feature is that the new rules are very flattering for donors’ ODA figures. The DAC needs to take these rules back to the drawing board, or lose credibility.