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It’s been almost 10 years since I sat down for coffee with Ngozi Okonjo-Iweala in Davos. A former World Bank VP and then Nigeria’s finance minister, she was looking for assistance in what became, 15 months later, a $30 billion debt reduction deal with Nigeria’s bilateral creditors. I’m proud that CGD played a role in securing a deal; forgiving the debt of an oil-rich country burdened by corruption was controversial and complicated (see Todd Moss’s April 2006 blog post here). A first step was more political than financial: persuading Nigeria’s creditors in Europe that Nigeria was eligible for IDA status. At that and every subsequent step during two rounds as finance minister (including managing a reduction in Nigeria’s regressive fuel subsidies), Minister Okonjo-Iweala’s contribution has been fundamental in her own country’s struggle to become a better economy and democracy.
In the meantime, Ngozi Okonjo-Iweala has served as vice president and then managing director under the last three presidents of the World Bank, and in 2012 was a candidate for the presidency at the World Bank.
So it is a thrill for me that Ngozi is now joining CGD as a distinguished visiting fellow. In the immediate future she will be working on the challenge of deepening and broadening financial services (credit, savings, insurance) for the world’s small farmers, bringing her own extraordinary experience and economic savvy to that tough issue.
When the world’s finance ministers and central bank governors assemble in Washington later this month. they would do well to focus on another looming debt crisis that could hit some of the poorest countries in the world, many of whom are also struggling with problems of conflict and fragility and none of which has the institutional capacity to cope with a major debt crisis without lasting damage to their already-challenged development prospects.
International actors have criticized decisions by the Trump administration to reject the Paris Climate Accord, abandon the Trans Pacific Partnership, and withdraw from a United Nations declaration intended to protect the rights of migrants. However, there is one international body, the Paris Club, whose members may be rooting for the United States to leave. That’s because, in the absence of congressional action, continued US membership in the Paris Club could impair the economic prospects of some of the poorest countries in the world.
Even for countries that are far away from graduating from foreign aid, the importance of domestic resource mobilization for maintaining macroeconomic stability and sustained economic growth is well documented. A look at the experience of countries that have received HIPC debt relief validates this point and underlines the need for attaching a high priority to tax policies and practices in international assistance programs for low income countries.