[stop-imf] AP: U.S. Opposes Changing Debt Relief Plan]

[robert weissman]

U.S. Opposes Changing Debt Relief Plan


By JEANNINE AVERSA
The Associated Press
Tuesday, September 13, 2005; 6:23 PM

WASHINGTON -- The Bush administration warned Tuesday that a plan to wipe
out $40 billion worth of debt held by poor countries could come unglued
if attempts are made to significantly change it.

Countries that are members of the World Bank, the IMF as well as others
have been talking about how to implement a debt cancellation deal
announced with much fanfare in July when leaders of the world's eight
major industrial countries gathered in Gleneagles, Scotland.



The debate is likely to figure prominently at the annual meetings Sept.
24-25 of the 184-nation World Bank and IMF.

The agreement would initially cancel an estimated $40 billion worth of
debt payments that 18 poor countries _ most in Africa _ owe to
international lenders such as the World Bank and IMF.

Disputes center around a number of issues, including whether all of the
money that will be lost through debt cancellation will be made up fully
by the rich countries and how long the rich countries will need to make
payments.

The Netherlands and Scandinavian countries, for instance, want to make
sure that any debt deal doesn't reduce monies available to the World
Bank and other international lending institutions to provide aid, World
Bank President Paul Wolfowitz said in a recent interview with The
Associated Press.

Meanwhile, some anti-poverty and other groups want the debt relief
expanded to cover 60 plus poor countries. The agreement initially covers
18 countries and as many as 20 others could be eligible if they meet
certain conditions.

If there are "attempts to significantly add to the number of eligible
countries or the financing requirements beyond the original Group of
Eight deal, then the deal would be in jeopardy," warned Treasury
Department spokesman Tony Fratto. "Attempts to alter the deal at this
point can make it very, very difficult to move forward and get it done."

Fratto insists that the United States _ a champion of fully erasing poor
countries debts _ wants to see the accord from the Group of Eight
nations implemented. Group of Eight countries are the United States,
Japan, Germany, France, Britain, Italy, Canada and Russia.

Their initiative would cost billions of dollars spread over decades.
Rich countries have pledged to cover the money that would be lost over
the next three years by the World Bank's International Development
Association, which makes interest-free loans to the world's poorest
countries.

After that three-year period, though, the plan is fluid. Rich countries
have promised to make sure debt cancellation is paid for in the years
ahead but details as to exactly how that would work and how much
countries would have to pay haven't been nailed down.

An internal World Bank paper raised the concern that the debt proposal
"could reduce IDA's financial capacity significantly and may fail to
deliver additional resources to poor countries."

"There are a lot of tensions," said Max Lawson, policy adviser to Oxfam,
an international aid group that supports debt cancellation to
impoverished countries. Lawson said he's sympathetic to the notion that
the rich countries should have a specific, binding commitment to pay for
debt cancellation in the decades ahead and to make sure that overall
resources of the World Bank and other lending institutions aren't
diminished.

"We don't think the deal will fall apart completely. But there's the
possibility that it could be weakened or watered down," Lawson said.

Oxfam would like to see the debt agreement include more countries,
Lawson said. The group doesn't want additional eligibility requirements
put on poor countries, he said.

Wolfowitz, in an interview with the AP last week, acknowledged there are
thorny sticking points that need to be resolved but he was cautiously
optimistic that an agreement would be adopted at the upcoming World Bank
and IMF annual meetings.

IMF spokesman Thomas Dawson, responding to a reporter's question about
the debt debate on Tuesday, downplayed the threat that the deal could
come unhinged.

"We are on track" to consider the proposal during the annual meetings,
he said, adding that it wasn't his sense that "anything is falling apart."



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