Theory, practice and potential of debt for development swaps in the Asian and Pacific region Danny Cassimon * , Jos Vaessen Institute of Development Policy and Management, University of Antwerp, Venusstraat 35, 2000 Antwerp, Belgium Received 22 January 2006; received in revised form 30 May 2006; accepted 3 June 2006 Abstract This paper discusses to what extent debt relief embedded in debt swaps linked to development can be helpful in reaching development goals such as the Millennium Development Goals. A range of historical and current international debt relief practices and proposals is assessed on the basis of their ability to generate additional resources and their effectiveness in channeling these resources towards development by ways of earmarking. It is argued that traditional debt for development swaps, because of their marginal and micro- earmarked nature, are less efficient and effective than larger scale operations such as those that are linked to the PRSP (‘debt for PRSP swaps’) as in the HIPC Initiative and recent extensions. Observing that current practice largely bypasses the Asian and Pacific countries, we finally assess to what extent there is an untapped potential to promote debt swaps for this region. # 2006 Elsevier B.V. All rights reserved. JEL classification : F34; F35; O11; O19 Keywords: Debt swaps; HIPC; Debt relief; MDG; Poverty 1. Introduction In June 2005, the G8 proposed a new debt relief initiative, called the Multilateral Debt Relief Initiative (MDRI), which was designed to further alleviate outstanding debt in support of the Millennium Development Goals (MDGs). In the same year, in September, a concrete proposal on debt for MDGs swaps, for countries not qualifying under this initiative, were presented at the UN Summit in New York. The two events are indicative of recent developments in the practice and debate on aid and debt relief. www.elsevier.com/locate/ecosys Economic Systems 31 (2007) 12–34 * Corresponding author. Tel.: +32 3 220 4966; fax: +32 3 220 4965. E-mail address: danny.cassimon@ua.ac.be (D. Cassimon). 0939-3625/$ – see front matter # 2006 Elsevier B.V. All rights reserved. doi:10.1016/j.ecosys.2006.12.003