Let’s unpack our arguments for why a debt standstill would be the wrong move for IDA at this point in time.
CGD Policy Blogs
Calling All Official Bilateral Creditors to Poor Countries: Switch to IDA Concessional Terms as Part of COVID-19 Response
Overall public debt in IDA countries has risen rapidly since before the global financial crisis; and while debt to private creditors (mostly in the form of bonds or bank loans) has increased, the biggest increases have come from multilateral and official bilateral credits.
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.
In new research, we find that China’s role as a creditor has likely been a key driver of more burdensome lending terms in the form of higher interest rates, shorter maturities, and shorter grace periods for lower-income countries.