G7 MUST CONTRIBUTE TOWARDS HIPC DEAL: WOLFENSOHN. (fwd)

[Robert Weissman <rob@essential.org>]

World Bank Development News, 9/14/99

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G7 MUST CONTRIBUTE TOWARDS HIPC DEAL: WOLFENSOHN.

The G7 nations must provide $3 billion to help the World Bank implement its
part 
of the Highly Indebted Poor Countries (HIPC) debt relief initiative, Reuters 
reports World Bank President James Wolfensohn said in Copenhagen yesterday. A
concrete agreement was likely to be reached at the IMF/World Bank annual 
meetings later this month, Wolfensohn added.

"That?s what the finance ministers are now considering. And hopefully they
will 
support their leaders and tell us at the end of the meeting how they are going 
to do it," Wolfensohn said, noting that the Bank has agreed to write off $2 
billion worth of loans under HIPC. We?ve said to the G7 and others: you?ve got 
to find the other $3 billion." The Bank?s slice of the debt relief package was 
some $5 billion, he noted.

Asked whether he expected a deal to be reached at the upcoming IMF/World Bank 
annual meetings, Wolfensohn said, "Yes."

The news comes as Dow Jones reports that IMF Managing Director Michel
Camdessus 
has asked the Fund's executive board to consider increasing the amount of gold 
earmarked for revaluation, as opposed to an outright sale, to 14 million
ounces 
from an originally planned 10 million ounces. According to sources familiar 
with the board's discussion on the matter yesterday, Camdessus proposed the 
increase to cover an expected shortfall in contributions by wealthy nations 
toward funding debt relief for poor countries. Camdessus presented the figure 
of 14 million ounces to the board as a worst-case scenario based on the IMF 
failing to secure any additional help from developed countries in meeting the 
cost of providing debt relief.

It will take further discussions over the coming days before the board decides 
on the amount of gold that could be revalued through a circular transaction 
process that will likely involve a group of central banks from the wealthiest 
nations, says the story. A final strategy for using IMF gold reserves as a 
means to partly fund IMF commitments to the HIPC initiative is due by the 
September 26 meeting of the 24-member IMF Interim Committee. Many of the kinks 
in the plan will be ironed out this Friday when a meeting of Interim Committee 
deputies meet in Washington.