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In 1999 Nigeria became a democracy again after a long period of dictatorship. One of the top priorities for the newly elected President Obasanjo was to clear the huge foreign debt that the country had built up in previous decades. Most of this debt was with bilateral official creditors, united in the so-called Paris Club.1 But debt relief to Nigeria was controversial. Although the country has a low income, it has large oil reserves with which it should be able to pay its debt. Furthermore, the country is notorious for its corruption and for irresponsible economic policies.

As China is poised to become the world's largest creditor, concerns about debt sustainability have grown. Yet considerable confusion exists over what is likely to happen when a government runs into trouble repaying its Chinese loans. In this paper, the authors draw on CARI data to review the evidence on China's debt cancellation and restructuring in Africa, in comparative and historical perspective. Cases from Sri Lanka, Iraq, Zimbabwe, Ethiopia, Angola, and the Republic of Congo, among others, point to patterns of debt relief with distinctly Chinese characteristics.

As China is poised to become the world's largest creditor, concerns about debt sustainability have grown. Yet considerable confusion exists over what is likely to happen when a government runs into trouble repaying its Chinese loans. In this paper, the authors draw on CARI data to review the evidence on China's debt cancellation and restructuring in Africa, in comparative and historical perspective. Cases from Sri Lanka, Iraq, Zimbabwe, Ethiopia, Angola, and the Republic of Congo, among others, point to patterns of debt relief with distinctly Chinese characteristics.

Summarizes the discussion on foreign aid and debt relief occurring during a workshop at the 51st Commonwealth Parliamentary Conference, September 2005. Much attention is given to Africa, and topics include the need for African countries to pursue partnerships with donor countries, the issue of debt cancellation, and accountability and responsibility in the handling of aid. While money is important, other things were equally important for successful development aid, eg, technology transfer.

This paper analyzes the effectiveness of debt relief and foreign aid in a neoclassical growth framework with a conflict of interest between the donor and the recipient government. Conditionality is modeled as a dynamic contract that is enforceable only by the threat of aid sanctions. Quantitative results show that debt relief and unconditional foreign aid have no long-run effects since the recipient government accumulates new loans. In contrast, debt relief in combination with conditional foreign aid is effective in promoting growth and reducing poverty. However, debt relief may be counter-productive since they make the punishment threat less severe such that self-enforcing aid contracts are characterized by weak conditionality.