[stop-imf] US unprepared to forgive all debt of poor nations

[Robert Weissman]

From: Elena McCollim <emccollim@bread.org>


Apologies for duplication, but the below is worth noting.  Also worth
noting, however, is that Secretary O'Neill's remark quoted in the
first paragraph, was not made in the context of answering the
question about whether the U.S. would back, at the Genoa
summit, the 100 percent cancellation of World Bank and IMF debt
owed by the poorest countries. Rather, he made his remark at the
beginning of the hearing, in the context of his general observations
about financial rescue packages for middle-income countries, such
as Turkey or Argentina. He was drawing the distinction between
multilateral (i.e., IMF) support for such packages, as against
bilateral action (i.e., from the U.S.).

------- Forwarded message follows -------
From:           	"Francis Lemoine" <flemoine@eurodad.ngonet.be>

- U.S. UNPREPARED TO FORGIVE ALL DEBT OF POOR
NATIONS
   (world Bank Press Review - may 16 2001)

US Treasury Secretary Paul O'Neill told lawmakers yesterday that
the administration isn't ready to excuse 100 percent of the
outstanding US debt held by poor nations, reports Dow Jones. "We
don't think it's a good lesson to teach others around the world that
the US taxpayer will always be there no matter what," O'Neill said,
testifying before the House Appropriations Subcommittee on
Foreign Operations, Export Financing, and Related Programs.

Also reporting, Reuters quotes O'Neill as saying further, "We don't
think we're ready for that so we wouldn't be proposing it at the G7."


AFP notes that he argued that "many of the countries, even without
interest payments, are in terrible condition ... We need to be very
direct in what we're doing and saying," and if an institution is not
expecting a return from a loan, then the monies should be a grant.
"We would be very well served if through these devices our
intentions were really very clear."

His comments come at a time when there is growing pressure on
the G7 to stump up more money to expand the program of debt
relief for the Heavily Indebted Poor Countries (HIPC) debt relief
initiative, says Reuters, noting that NGOs are calling on the World
Bank and the IMF to write off 100 percent of debt owed to them by
the world's poorest countries. However, these global lending
institutions say that they cannot afford to do this without new funds
from their major shareholders.

Meanwhile, more calls for debt cancellation and further aid to
eradicate poverty and the AIDS pandemic in Africa came from
Congress yesterday, Reuters notes in a separate report. Some
members of the House Subcommittee on International Monetary
Policy and Trade called on the IMF and the World Bank to cancel
the debt held by some of the world poorest countries completely in
an effort to root out poverty.

"We should call on the World Bank and the IMF to cancel the
debts they are owed by the impoverished countries of the world,"
Congressman Bernard Sanders (Independent-Vermont) told the
committee. "I believe the World Bank and the IMF have the
resources to remove the burden of crippling debt for the world's
poorest nations, they only lack the vision and the will, so I want us
to give them that vision and will," he added.

But a spokesman for the World Bank said complete debt
cancellation was impossible because of the revolving trust fund
nature of the lending institutions. Tony Gaeta estimated the debt of
the world's 64 poorest nations to be around $175 billion and said
that the HIPC debt relief program showed there is "no shortage of
will," as Sanders had alleged. He defended debt relief as an
alternative to debt cancellation, adding that while HIPC countries
would remain reliant on foreign assistance for a while, debt relief
could help set them on the path to economic growth.

Sanders also stressed that fighting AIDS was paramount and urged
the US and lenders to expand their involvement in the struggle
against the devastating pandemic, the story notes. AIDS kills an
average 5,000 Africans a day and 25 million people are infected
with the HIV virus, according to World Bank data.

Last week, notes the story, US President George W. Bush
pledged $200 million to the global AIDS trust fund proposed by UN
Secretary-General Kofi Annan during a summit in Africa last
month. Congressman Doug Bereuter (Republican-Nebraska)
welcomed the initiative and said that the World Bank had also
become more active in fighting AIDS.