What must rich-country governments do to keep crisis effects in poor countries at a manageable level?
It is essential that they maintain their ODA budgets. The ministers in charge must defend their funds as best they can. In times of crisis, ODA reductions hurt poor countries particularly bad. Moreover, we can already foresee future solvency problems. Therefore, the governments of rich nations must swiftly take action to set up new procedures to resolve such problems fast and in fair terms. Doing so is in their own interest, by the way. Unless something is done, we are once more heading for a needlessly tough process which, with inadequate measures, will drag on for decades – as was been the case after the crises of the early 1980s. What do you propose? The new model must improve on the old model in two respects. First, it must involve all creditors, in other words, nation states, multilateral institutions, the private financial sector and investors who have underwritten loans. There has been a free-rider problem in the past: if countries and multilateral institutions forgive debts, th
