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In praise of debt

There are sound reasons for countries to incur debt. Relief is not always helpful

By Alan Shipman   July 2005

Once a truth is universally acknowledged, some economists feel a duty to shoot it down. Many of those who have wrestled longest with the plight of the world’s poorest believe that debt cancellation is often bad for those receiving it. They have strong reasons to dispute the consensus on debt relief set to be crowned at the G8 meeting in Gleneagles this July.

The economist Jeffrey Sachs has been a key inspiration behind the $51bn debt cancellation plan that will write off all the multilateral debt of, eventually, 27 mostly African countries. Debt relief is a major component of Sachs’s…

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