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5 Principles on uses and misuses of Debt Relief to address the Coronavirus Pandemic

Debt relief for low-income countries (LICs) is on the table of measures to consider for coronavirus response. But we should recognize that the current crisis is different from the past when it comes to a major, multi-country debt relief effort, and it’s important to think through where debt relief makes sense and where it doesn’t as a response to this pandemic. The imperative right now is to get cash to LICs as quickly as possible. Suspending some debt service payments may be a good first step in freeing up some budget space for new spending. Beyond that, protracted debt-relief negotiations with multilateral and commercial creditors right now could be a distraction at best but could also actively undermine the ability of institutions like the World Bank to offer new financing for crisis response.[…]