Liberia Cuts its Debt with $1.2 Billion Buy-Back at 97 Percent Discount

April 16, 2009

In a huge step forward, this week Liberia slashed its foreign debt by buying back $1.2 billion in commercial debt — about one-quarter of its foreign debt — from its private foreign creditors, including banks, hedge funds, and other “distressed debt” investment funds. President Ellen Johnson Sirleaf announced today that the Government had purchased the debt at a discount of nearly 97 percent off the face value, the deepest discount ever negotiated on developing country commercial debt. The $38 million needed for the deal was provided by some of Liberia’s strongest partners — the World Bank, Germany, Norway, the United Kingdom, and the United States, so the debt was eliminated at zero cost to the people of Liberia. I am fortunate to have had the opportunity to work closely with President Sirleaf and her Government for the last several years working to complete this deal. Read More…

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Wal-Mart and the AFL-CIO Agree: The U.S. Can (and Must) Do a Better Job Fighting Poverty, Disease, and Lack of Opportunity in the Developing World

March 20, 2009

This is a joint posting with David Beckmann, originally appearing on the Huffington Post Web site on March 17, 2009.

In the face of big global challenges, President Obama has rightly called for a new, smarter U.S. foreign policy that focuses on bolstering our long-term security, building our alliances, and expanding global prosperity. A central element of his new approach is elevating U.S. support for global development and balancing it with defense and diplomacy, which in practice means strengthening U.S. foreign assistance and other programs that fight poverty, disease, and lack of opportunity in developing nations. Read More…

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Dear Mr. President-Elect, Some Early Steps to Begin Elevating Development

November 12, 2008

This is a joint posting with Sheila Herrling
This week the Modernizing Foreign Assistance Network, a fast-growing bipartisan coalition of international development and foreign policy leaders that I am privileged to co-chair, will be sending to the Presidential Transition Team its recommendations for jump-starting the process of strengthening our development programs. A growing number of voices agree that now more than ever, we must substantially bolster our capabilities to fight poverty and create economic opportunities around the world, both through increasing our investments over time and by making these investments much more efficient and effective. Strengthening these programs may well be one of the best investments we can make over the long term to restore global stability, security and prosperity.

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Liberia is Moving Forward and Here’s Your Chance to Participate

April 1, 2008

Exciting things happening in Liberia right now, especially at the Ministry of Finance. I am pleased to announce the Liberian Minister of Finance, Dr. Antoinette Sayeh, will be speaking at a CGD event later this month. Minister Sayeh will offer an overview of recent developments in Liberia covering debt relief, Liberia’s Poverty Reduction Strategy, and overall economic progress; a moderated discussion will follow. Liberia recently reached its HIPC decision point, a huge milestone in the long process towards comprehensive debt relief. In April, Liberia will release its Poverty Reduction Strategy, laying out priorities and goals for the next three years (for earlier analyses of Liberia’s development progress, see the CGD essay co-authored by President Ellen Johnson Sirleaf and myself and my prior working paper on prospects for economic growth in Liberia. Minister Sayeh will be speaking on Friday morning April 11 from 9:00-10:30 at a Dupont Circle location to be announced. Save the date and watch for details on the CGD events page or sign up for CGD event invitations here.

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IMF Announces Financing For Liberia’s Debt Relief: A Good Start

November 13, 2007

Good news! The IMF has finally moved forward on Liberian debt relief. Yesterday’s IMF announcement that it has agreed on the necessary financing was a strong endorsement by the international community of Liberia’s progress under its new government. It took more than a year of pushing and prodding, but Liberia now can formally begin the debt relief process.
But this is just the beginning. The IMF has not forgiven Liberia’s debts, but rather committed the financing necessary so that Liberia can begin the HIPC debt relief process. With any luck, Liberia can move to a HIPC Decision Point (under which it would receive “interim” relief) sometime in the next couple of months, and then to Completion Point (the final step of the debt relief process) perhaps in 2009.

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The End of An African Nightmare: Steve Radelet Writes from Liberia

October 5, 2007

The following post was first published on Nicholas Kristof’s New York Times blog, where Radelet, a CGD senior fellow, is one of several guest bloggers. Radelet lived for many years in Africa and Asia, taught at Harvard, and worked at the U.S. Treasury. He is currently serving as an economic advisor for President Ellen Johnson Sirleaf of Liberia.
I am witnessing a truly remarkable turnaround. I’m in Monrovia, Liberia, in the midst of what until recently was a horrible war zone, but is now a place of hope. Led by the indomitable President Ellen Johnson Sirleaf, the first woman elected head of state in Africa, Liberia is beginning to rebound from its devastating civil war and the monstrous incompetence of Samuel Doe and Charles Taylor that nearly destroyed the country. Liberia is at peace, the economy is growing, democracy is taking root, kids are going back to school, and families are being united.

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The Economics and Politics of CARE’s Decision to Pass Up Millions in U.S. Food Aid

August 20, 2007

I join my colleague Rachel Nugent in offering Three Cheers for CARE Decision to Forego U.S. Food Aid!
U.S. food aid has a long and complicated history. Most people think of food aid as “doing good”—feeding the starving—and it is often used for this purpose. However, large amounts of food aid are sold to finance development projects, often administered by the U.S. or by NGOs. And, in the process, food aid can actually do harm.
Understanding the complexities of the issue is hugely important in general and, specifically, now. Congress is mid-way through debating a new five-year Farm Bill: the House passed a Farm Bill in July that did not address calls for reform in food aid to “do best” and the Senate will take up the bill this fall. For those interested in understanding the underlying issues on food aid, read on:

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With the G8 Push for More Aid, Are Donors Spending More Selectively?

June 4, 2007

The G8 summit in Heiligendamm, Germany, this week will focus global attention on African development and broader foreign assistance issues. Many analysts are examining the G8′s progress towards its pledge to double foreign assistance to Africa by 2010, made two years ago at the summit at Gleneagles, Scotland. Initial partial evidence suggests that while progress is being made, several countries appear to be falling behind on meeting this pledge.
In a forthcoming CGD Brief, Sami Bazzi, Sarah Rose and I take a different approach and focus not on pledges, but on the allocation of aid and how it has changed in recent years. In the late 1990s, donors began to state their commitment to providing more assistance to poorer countries and to countries with stronger governance. We provide a broad assessment of the extent to which this has occurred in practice. We examine these trends both for total aid, and for aid excluding debt relief and humanitarian assistance.

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US Presidential Candidates Put Development on the Agenda

April 24, 2007

Barack Obama’s powerful foreign policy speech in Chicago on Monday laid out a clear vision for regaining US leadership in the world, including on critical issues confronting the poorest countries of the world. Senator Obama called for strengthening the operations of the United Nations, World Bank and other multilateral institutions to solve the world’s most pressing problems, rather than just attacking them. He also called for a doubling of US foreign assistance to $50 billion per year by 2012 to build education systems, fight disease, help build democracies, and strengthen governance systems. He made it clear why these goals are important not just for the poorest citizens of the world, but for the people of the United States.

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Wanted: A Few Good Women and Men for the Scott Family Liberia Fellows

March 26, 2007

Want a challenge? Here is your chance — or a chance for someone you know — to get directly involved in helping a key African country get back on its feet after years of civil war and incompetent management.
Liberia’s civil war killed over 270,000 people, destroyed basic infrastructure, and left the country in ruins. But in January 2006 Liberians inaugurated Ellen Johnson Sirleaf as president — the first woman elected head of state anywhere in Africa. Under her leadership the government has increased revenues by 40 percent, turned on electricity and water to parts of Monrovia for the first time in 15 years, cracked down on corruption, begun to rebuild roads, and quadrupled primary school enrollments.
Yet the government faces huge challenges, including severe capacity shortages at the sub-ministerial level, since many skilled civil servants were either killed during the war or fled the country.
The Scott Family Liberia Fellows Program will make a small but vital contribution to partially filling the capacity gap. Under the program, approximately five to six fellows will work for one year over the next three years as special assistants to key government ministers and other senior officials in the government of Liberia. The program is funded by a generous $1 million contribution from the family of CGD founder Ed Scott.

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Global Fund Delays Leader Choice: Here’s Why

November 2, 2006

Last night the Board of the Global Fund to Fight AIDS, Tuberculosis, and Malaria admitted that it has been unable to reach a decision on its new Executive Director, and decided to extend the search until April. Apparently the Board narrowed the list of five final candidates to two front runners, but was unable to reach consensus on a final candidate. The impasse reflects the unusual structure of the Board, its strong emphasis on consensus, and its desire to give the new ED a strong (rather than split) mandate. (The new ED will need a strong mandate if he or she is to tackle the agenda set forth in The Future of the Global Fund: Challenges and Opportunities for the New Executive Director, the new CGD report by a working group that I chaired.)
The Global Fund’s Board is unique among international bodies. It puts a very strong emphasis on broad participation among donors, recipients, NGOs, the private sector, and people living with the diseases in an attempt to take seriously the ideas of broad participation, transparency and democracy. The Board consists of 20 voting members (and four non-voting ones). The Board’s by-laws (.pdf) formally divide these twenty seats into two groups of ten each: a “global north” group consisting of eight donors, one private foundation representative, and one private company representative; and a “global south” group consisting of seven recipient countries, a northern NGO, a southern NGO, and a person representing communities living with the diseases.

For any proposal to pass a vote, the by-laws require a double two-thirds super majority — that is, 7 of 10 votes in each of the two groups. This standard obviously is a high one for any organization to reach, and reflects the importance the Global Fund puts on consensus and broad agreement. But in this case it was unable to reach its own standard: each of the two final candidates received the two-thirds needed from one group, but not the other. This divide reflected differences in views between the donors and recipients, a strong push from each group to assert more control over the organization, and inevitable horse-trading between political constituencies for votes. Alas: democracy is messy.

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Liberia turns on water and electricity

July 26, 2006

Today is a great day for the new government and the people of Liberia. For the first time in 15 years, parts of Monrovia have running water and functioning electricity. This may not seem like a lot, but it is HUGE for people that have seen nothing but war, destruction, and theft for so many years. I have recently returned from Liberia, my fifth trip since the election of President Ellen Johnson Sirleaf, and while the new government is facing huge odds, they are making steady, significant progress. Budget revenues are up, misappropriation of funds is down, roads are being repaired, stores are reopening, and people are repairing and repainting their houses. The challenges are huge and the odds are long, but this government is making some initial small steps forward, and you know what they say about a lot of small steps…

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Remittances aren’t charity, and one country does not make an index

April 13, 2006

The Hudson Institute has just released its new Index of Global Philanthropy. The report makes an important point: U.S. private charitable flows to developing countries are on the rise and can do much good. In a world with the Gates, Turner, Hewlett, Soros and other foundations doing plenty of good things, it is a point worth making. But this new index is flawed in crucial ways. Most obviously, it seems to have been misnamed: since it only covers one country, it is not really an index at all, in the sense that this word is normally understood. Our own Commitment to Development Index, for example, ranks 21 of the richest countries across seven policy areas. The U.S. falls in the bottom half of the distribution.
Even in its own terms of counting just U.S. giving, however, the report makes a key mistake by counting remittances as “assistance.” Remittances account for fully half of the $99 billion in so-called private assistance that the report counts. Make no mistake: remittances are important financial flows, are understudied, and can have important effects on development. But the fact that they are an important financial flow does not make them assistance, philanthropy, or a measure of whether the U.S. is stingy or generous, anymore than bank loans or foreign direct investment (other important financial flows) are by any measure assistance or philanthropy.

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Liberia’s President Sirleaf: A true African hero

March 17, 2006

President Ellen Johnson Sirleaf addressed a Joint Session of Congress on March 15th. This is only the second time in the last decade that an African Head of State has addressed Congress – the first being South Africa’s Nelson Mandela. She was superb. The combination of humility, resolve, courage, strength of purpose, and vision, along with great communication skills, made it one of the best speeches I have seen on any topic in a long time. If you’d like to see a true African hero, watch this clip. Or better yet, come see her live at CGD on Monday afternoon.

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Sec. Rice’s Aid Reform Plan Falls Short

January 19, 2006

The reorganization of US foreign assistance announced today by Secretary Rice has some strong points, but it falls far short of what is needed and could create some new problems.
There is little question that a reorganization of US foreign assistance programs is badly needed. At least 18 federal agencies provide some kind of foreign assistance, and the pattern of proliferation was extended when the Bush administration added the Millennium Challenge Account and the Office of the Global AIDS Coordinator to the mix.

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The Novelist’s Burden

December 16, 2005

Paul Theroux has written an entertaining but misguided screed against Bono and foreign aid in general in yesterday’s New York Times titled The Rock Star’s Burden (login required)

Those of us who committed ourselves to being Peace Corps teachers in rural Malawi more than 40 years ago are dismayed by what we see on our return visits and by all the news that has been reported recently from that unlucky, drought-stricken country. But we are more appalled by most of the proposed solutions.

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Providing New Financing to Low-Income Countries with High Levels of Debt: Some Considerations

September 1, 2003

Low-income countries with high levels of debt face a dilemma when considering new financing. Additional funding is needed to meet key development objectives, but too much new financing in the form of debt can exacerbate debt problems. Countries that borrow too much – even on concessional IDA terms – can quickly find themselves facing rapidly rising debt ratios that could threaten debt sustainability in the future. However, a policy that constrains new borrowing can undermine the country’s ability to achieve its development goals, especially if debt is contracted on concessional terms to finance activities with relatively high rates of return. New financing in the form of grants can ease this tension, but the total volume of grants available is constrained, so this option is limited.

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  Erin on Why Don’t They Want What We Know They Need?: I think it’s important to note that people in developing countries often use the same...
  
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  April Harding on EBRD Raises the Bar for International Appointments: Interesting and perhaps a bit unintuitive isn’t it that the secretness...
  
  Shawn Cunningham on Why Don’t They Want What We Know They Need?: Dear Charles, This is a great post. I wonder if another reason could be that...
  
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