US hardliners soften on debt 

Way opens for £62bn relief package

Debt relief: special report
Jubilee 2000 

Charlotte Denny and Larry Elliott 
Wednesday March 8, 2000 

The odds on a comprehensive package of debt relief for the world's poorest 
countries shortened yesterday as right-wing republicans on Capitol Hill 
called for a total write-off of loans to the 41 worst affected nations. 
The move by one of the last bastions of opposition to loans forgiveness 
delighted debt campaigners, Jubilee 2000, who have been calling for unpayable 
third world debts to be written off by the end of the year. 

"A committee dominated by neo-liberal republicans is calling for outright 
debt cancellation for HIPC countries. There is now almost unanimous agreement 
on this issue, yet the International Monetary Fund and the World Bank will 
not put this overwhelming consensus into action," said Anne Pettifor, Jubilee 
2000's director. 

"Even in Mozambique after the total devastation, the IMF and World Bank 
refused to cancel debts and instead are imposing new loans and calculating 
future payments." 

House republicans proved to be one of the biggest stumbling blocks to 
American implementation of a $100bn (£62bn) international loans forgiveness 
package proposed by world leaders last September. The White House failed to 
get funding from congress for the US share of the deal which would have 
written down about half the loans of the worst affected countries. 

The call for total debt relief comes in a report on the future of the IMF and 
the Fund, released yesterday by an advisory committee to the congress, 
dominated by republicans. The commission voted unanimously that the Bank and 
the Fund should write off their claims against all heavily indebted poor 
countries that implement effective economic and social programmes in 
conjunction with the Bank. 

"What they have said about debt relief is very encouraging, but they've got 
to put their money where their mouths are," said Justin Forsyth, head of 
policy at Oxfam. 

Aid campaigners hope the report will break the logjam and give the US 
administration the political backing to fund America's contribution to the 
trust fund. The fund was set up by Britain's Gordon Brown for underwriting 
the Bank and the Fund's share of debt relief. 

Other development experts fear that traditional hostility towards the Fund on 
Capitol Hill may yet sink the US administration's attempts to find the $210m 
shortfall. 

The report calls for the IMF to pull out of long-term lending in the third 
world and to restrict itself to emergency lending to countries facing 
financial crises, a view supported by the US Treasury secretary, Larry 
Summers. 

The Bank should replace its loans programme with grants and stop lending to 
countries which have access to private capital markets. 

Development experts warned that slimming down the Fund and focusing the Bank 
only on the poorest countries could reduce the amount of funding for 
development. 

"Building sewers and schools is vital for development even in middle income 
countries, but no private sector fund is going to be interested in lending 
for that," said Seth Amgott, a spokesman for Oxfam America. 


 
 
         


hkanteh

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