Free exchange: Forgive and remember

by / Thursday, 18 June 2015 / Published in Economy

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My big fat Greek divorce

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Free exchange


Debt relief boosts growth, but only when it comes with conditions

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SINCE the financial crisis all manner of sovereign debtors have sought relief. Ukraine wants concessions from bondholders; Greece, which has already obtained that, wants forgiveness from other governments too. They are appealing not just to creditors’ compassion, but to economic efficiency: diminishing their burden will be for the greater good, they suggest, in that it will provide a boost to growth. That was also one of the arguments made by advocates for the world’s 39 “heavily indebted poor countries” (HIPCs), which secured a promise of substantial debt relief a decade ago, at a summit of rich countries in Gleneagles, a Scottish resort. HIPCs’ external public debt duly fell from about 100% of GDP in 2005 to 40% by 2012, thanks to big write-offs. But new research suggests the relationship between …<div class="og_rss_groups"></div>
Source: The Economy