[stop-imf] IMF,W. Bank could cancel poor countries' debts

[Robert Weissman]

IMF, W. Bank could cancel poor states' debt-campaign

LONDON, April 10 (Reuters) - The International Monetary Fund and World
Bank could afford to cancel the entire $50.8 billion owed them by the
world's poorest countries, a report by debt relief campaigners Drop the
Debt said on Tuesday.

Citing research by a firm of London accountants, Drop the Debt reiterated
its call for the two multilateral lending organisations to match the 100
percent debt relief commitment of G7 industrialised nations for so-called
Heavily Indebted Poor Countries (HIPC).

"They should take a reality check and act now to cancel the debt. From
today, the old excuse that they cannot afford to do so is completely
demolished,"  said Drop the Debt Director Adrian Lovett.

The HIPC initiative was launched by the G7, IMF and World Bank in 1996 to
help the world's poorest 41 countries boost spending on education, health
and social programmes by using resources currently spent on debt
servicing.

So far, 22 countries have benefitted from some relief under HIPC, but debt
campaigners say progress has been too slow and too cautious.

World Bank President James Wolfensohn last week spoke out against the
"hysteria" surrounding calls to extend debt relief currently on offer to
HIPC countries.

"If you advance the notion that you have complete debt relief you will of
course wipe out the World Bank...severely limit the (International
Monetary)  Fund, and in the end it will come back on your governments," he
told a hearing in the German parliament.

The Drop the Debt report, to be released in Washington later on Tuesday,
said raising HIPC debt relief to 100 percent would cost the IMF $368
million a year and the World Bank $353 million if applied to the orginal
41 HIPC countries plus Nigeria.

The losses could be balanced through a number of options, including using
reserves to generate extra income, without impairing the two
organisations' abilities to carry out their objectives, it said.

Wolfensohn said calls from some campaigners to offer 100 percent debt
relief to 64 countries would cost multilateral lenders alone $175 billion,
up from $70 billion at present and noted that the World Bank only had $29
billion in capital.

Drop the Debt, the successor organisation to the Jubilee 2000 campaign
group which disbanded at the end of last year, said the 22 countries which
have started to enjoy some HIPC relief are still spending more on debt
than on healthcare.

This was particularly serious for the 17 HIPC beneficiaries in Africa
which are spending $1.4 billion a year on debt -- virtually the same
amount that the United Nations' AIDS organisation UNAIDS recommends they
need to increase their spending by on combatting the spread of AIDS.

"The AIDS crisis is devastating Africa and the continent's biggest
creditors, the IMF and World Bank, are still taking the money," said
Lovett.