TO ESCAPE from penury, poor countries must build schools, roads and power plants. By definition, they do not have the tax revenue to do so. Foreign aid helps, but rich countries do not donate anywhere near the amount needed. That leaves loans as the only way to fund the necessary investment. For countries with limited means, these are in short supply too. The poorest spots on earth, dubbed highly-indebted poor countries (HIPCs) by the IMF, lose access to international debt-relief schemes if they take out loans at commercial rates. Yet concessionary loans are even harder to come by than the usurious sort.
It is this shortage that Bill Gates, whose foundation is the world’s biggest charity, and the Islamic Development Bank (IDB), which finances worthy projects in poor Muslim countries, hope to diminish. They are launching a new scheme to provide poor countries with cheap loans for things that banks rarely fund, such as disease eradication and sanitation. Over the next five years the bank will lend up to $2 billion to projects in health, agriculture and infrastructure, aimed at improving the lot of the poorest...Continue reading
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