[stop-imf] DEBT RELIEF EXPANSION COSTLY: U.S. TREASURY AIDE

[Robert Weissman]

Excerpted from World Bank's Development Press Review Wednesday, June 13,
2001

DEBT RELIEF EXPANSION COSTLY:  U.S. TREASURY AIDE. I nternational
financial organizations will not be able to afford by themselves, without
repercussions, to extend further debt relief to the poorest countries, and
the US is reluctant to add more of its own resources, Reuters reports a US
Treasury department official said yesterday.  Noting that some members of
Congress, as well as some NGOs, have advocated writing off 100 percent of
the international debt owed by so-called Heavily Indebted Poor Countries
(HIPCs), William Schuerch, deputy assistant secretary for international
development, debt and environmental policy, told a US House of
Representatives panel such an effort would be expensive.

"The costs of these proposals are tremendous-more than the (international
financial institutions) themselves can bear without taking resources away
from good performing countries or accelerating the need for significant
new capital to finance their lending activities," Schuerch said in
prepared testimony.

The HIPC initiative led by the World Bank and the IMF aims to cut the
debts of about three dozen of the world's poorest countries in half, says
the story, but critics of the program want more debt relief at a faster
pace than is being granted under current rules.  The Bank and the Fund
have countered those criticisms by saying they can grant only as much
relief as is afforded by contributions from rich donor nations such as the
US, Japan and Germany.

Countries getting debt relief under the HIPC program must promise to use
cash freed up from debt payments for spending on health and education and
to formulate strategies to boost economic growth. The story notes that
Schuerch repeated the Treasury's view that international lending should
focus on efforts to boost productivity, or output per worker hour-a key
for raising living standards.

Schuerch was testifying to Congress to try and secure funding for
commitments already made for the financing of several of the multilateral
development banks. The amount requested for international programs this
year totals $1.4 billion but the testimony focused on three requests.
These were $412 million for the ADB's Asian Development Fund, $30 million
for the International Fund for Agricultural Development and $165 million
for the Heavily Indebted Poor Countries (HIPC) trust fund.

Schuerch noted that the US still had influence at the table of the ADB
despite substantial arrears.  "But is it absolutely crucial that we live
up to the commitments we've made," he said.