DDP 732. Sydney Rosen, Jonathon Simon, Donald Thea, and Paul Zeitz. "Exchanging Debt for Health in Africa: Lessons from Ten Years of Debt-for-Development Swaps." November 1999. 26 pp.

Of the dozen or so issues on the agenda when the Group of Seven held its annual meeting in Cologne in June, 1999, few captured the attention of the world as much as debt relief for the poorest and most indebted nations. In the past half-decade, wide-ranging and active support has developed for reducing the debt owed by poor countries to banks, governments, and multilateral institutions in the developed world. Most proposals for debt relief have also called for more resources to be invested in improving the welfare of the poorest people, often through direct investment in social programs of the savings generated by debt relief. The purpose of this paper is to describe and assess one feasible approach to debt relief in sub-Saharan Africa: the debt-for-health exchange. Following up on proposals recently put forward by several international organizations and governments, it presents and assesses the past decade of experience with transactions that involve the exchange of poor country debt for a commitment to invest local resources in a social good, such as environmental protection, child health, or education. From this experience, it draws a set of lessons for designing debt-for-health exchanges for sub-Saharan Africa. The lessons provide guidance on how exchanges should be structured and emphasize the importance of transparency and accountability in managing the debt savings funds.

Keywords: debt relief, sub-Saharan Africa, HIV/AIDS

JEL codes: I18, F34, F35

This paper was produced by the Harvard Institute for International Development with support from the USAID Bureau for Africa, Office of Sustainable Development and the USAID Bureau for Global Programs, Field Support, and Research/Center for Population, Health, and Nutrition/Office of Health and Nutrition under Cooperative Agreement #HRN-A-00-96-90010-00 between USAID and Harvard University. It was presented at the 1999 ICASA Meeting, Lusaka, Zambia, September, 1999.

Sydney Rosen is an Associate in the Health, Education, and Social Development Group at the Harvard Institute for International Development.

Jonathon Simon is the Director of the Health, Education, and Social Development Group at the Harvard Institute for International Development and the Principal Investigator of the Applied Research on Child Health (ARCH) project being conducted under the Child Health Research Consortium of the Global Bureau, United States Agency for International Development.

Donald Thea is an Associate in the Health, Education, and Social Development Group at the Harvard Institute for International Development and the Scientific Director of the ARCH project.

Paul Zeitz is an Assistant Scientist in the Department of International Health at the Johns Hopkins University School of Hygiene and Public Health and is currently working in Zambia on the piloting of a Debt-for-HIV/AIDS Response mechanism.