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The HIPC Initiative and China’s Emergence as a Lender: post hoc or propter hoc?
Author:
Tito Cordella
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,
Maia Cufre
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Andrea F Presbitero
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https://orcid.org/0000-0003-4622-941X
Series:
IMF Working Papers
Volume/Issue:
Volume 2025: Issue 033
Language:
English
Publication Date:
31 Jan 2025
DOI:
https://doi.org/10.5089/9798229001366.001
ISBN:
9798229001366
ISSN:
1018-5941
Pages:
26
Keywords:
Sovereign debt; International lending; China; Debt relief; Geoeconomics; debt relief initiative; China's emergence; HIPC debt relief; debt forgiveness; MDRI debt relief; Debt burden; Debt service; Africa; Global
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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Twenty years after the Heavily Indebted Poor Countries (HIPC) debt relief initiative, debt levels in low-income countries are rising again, renewing sustainability concerns. The prevailing view suggests that China and other emerging lenders exploited the HIPC initiative to expand lending. Using a synthetic control method to generate a counterfactual, we find that, contrary to this narrative, China and other emerging lenders reduced net lending after debt relief; only multilateral creditors increased it. Furthermore, we find no support for the claim that debt relief encouraged lending to political allies. Overall, debt relief seems to have had limited influence on subsequent lending patterns.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund