Delivering on Debt Relief–From IMF Gold to a New Aid Architecture

With the end of the war in Iraq and the beginning of debate about how to rebuild that country, it is time to revisit this book, which came out a year ago. It puts forward the hypothesis that the key way to get developing countries back on their feet is through a systematic debt relief program. Only on certain occasions is direct foreign aid as a first step more advantageous. What approach is chosen depends on debt history as well as the political and economic factors of the individual country. However, one clear point here is that if a country's debt burdens are not sustainable, that debt will create a hole from which there is no emergence. (A recent estimate put Iraq's debt at $200 billion.) As the authors point out: "In our analysis and recommendations, we therefore focus on the merits of debt reduction not only as part of a larger effort to create the conditions for sustainable growth in recipient countries, but as a critical first step in the building of a ‘new aid architecture'."