Who Gets Debt Relief?

We use preliminary data from an ongoing effort to construct estimates of debt relief to study its allocation across 62 low-income countries. We find some evidence that debt relief, particularly from multilateral creditors, has been allocated to countries with better policies in recent years. Somewhat surprisingly, conditional on per capita incomes and policy, more indebted countries are not much more likely to receive debt relief. However, countries that are large debtors vis-á-vis especially multilateral creditors are more likely to receive debt relief. We do not find much evidence that debt relief responds to fluctuations in GDP growth. Finally, most of the persistence in debt relief is driven by slowly changing country characteristics, suggesting that it may be difficult for countries to “exit” from cycles of repeated debt relief.