William Easterly's The Elusive Quest for Growth - Chapter 7

Bono and so many other celebrities are touting the idea of debt cancellation for poor nations. But is this really a good policy? Easterly says no.
Countries that borrow enough money that they can’t pay it back have done so by “mortgaging the future”. Cancelling the debt, which is implicitly just more aid, is rewarding bad behavior.
After debt was relieved in the past, the countries with the most new borrowing were also the ones who received the most debt cancellation service. Thus these poorly managed governments decided they could rely on free aid that they knew would never be required to be paid back.
HIPCs received less foreign direct investment through the private sector than non-HIPCs. Yet they received more in IMF and World Bank financing. This simply shows that money-managers that are concerned about being paid back don’t put their money into HIPCs but NGO bureaucracies do invest (unwisely).
Again, Easterly and I agree that aid and debt cancellation should only be given to countries that have already made proper policy changes. Until they have a proven track record of trying to change and be responsible, there is no reason to pump money into their economies.