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Central bankers whine about U.S. debt but refuse to curtail it
By William McQuillen
Bloomberg News Service
Sunday, September 25, 2005
http://www.bloomberg.com/apps/news?
pid=10000087&sid=aEmldhM86RTA&refer=top_world_news
WASHINGTON -- The World Bank's policy making committee agreed to the
global debt-relief proposal pitched by the Group of Eight major
industrialized countries, and endorsed by an International Monetary
Fund committee yesterday.
The plan would wipe away as much as $55 billion in debt for as many
as 37 nations. The proposal will now be presented to the executive
boards of the IMF and the World Bank for approval.
"The path to complete debt relief now has been cleared," World Bank
President Paul Wolfowitz said at a news briefing.
The World Bank and IMF agreed to prompt "dollar for dollar"
compensation to quickly fund the programs for poor countries,
according to a report of a joint development committee for the World
Bank and IMF, countering concerns that the proposal would deplete
aid for future projects. G-8 countries pledged that there would be
no depletion of resources at the IMF or World Bank.
Earlier today, individual members of the World Bank's development
committee said they supported the relief proposal, though had
expressed concerns that the proposal would drain the budget of the
bank and limit its ability to make other loans.
The World Bank is the largest financer of projects to developing
nations, doling out $20 billion a year in low-interest loans and
grants aimed at alleviating poverty. Much of the money goes towards
improving roads, telecommunications and other infrastructure; and
encouraging fair financial and labor markets.
Members, including China and South Korea, had said a main concern is
that more money be provided by the G-8 countries to replenish the
funds that would be depleted from the bank's budget is it were to
write off such a large amount of debt.
All agreed on the need for additional funding for the debt relief
plan, the members of the joint development committee said in their
report. "We are confident that this package, including financing"
will "provide these benefits," the report read.
The agreement announced yesterday stresses that countries receiving
debt forgiveness should have sound policies and high governance
standards, and it recognizes the importance of "ensuring that the
IMF's capacity to provide financing to low-income nations is
maintained," according a statement following a meeting of the IMF's
board of governors. G-8 countries pledged to make the financial
commitments to offset costs of debt forgiveness.
"I was very pleased to see that the World Bank Development Committee
today strongly endorsed the proposal for 100 percent cancellation"
of the debt, U.S. Treasury Secretary John Snow said in a
statement. "We look forward to working with institutions, donor
countries, and most importantly, the countries that benefit from
this plan as we try to attain the ultimate goal of raising living
standards of poor people everywhere."
Without new donations from the U.S., European Union and other rich
economies, the debt-relief proposal could drain almost half the $130
billion that the World Bank has available to lend to the poorest
nations, according to a World Bank analysis prepared for the meeting
of its 184 members on Sept. 25.
Aid organizations said this agreement should be a start, and the
world should continue with programs to help the poor.
"This debt deal will benefit tens of millions of the poorest people
on the planet," said Bob Geldof, the organizer of the Live- 8
concerts supporting debt relief. "The deal should be implemented
without delay with no strings attached save that countries use the
money transparently to tackle poverty, hunger, disease and
illiteracy."
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