IMF WORLD BANK MUST DO MORE ON DEBT RELIEF (fwd)

[Robert Weissman <rob@essential.org>]

>From the World Bank's news summaries:

IMF, WORLD BANK MUST DO MORE ON DEBT RELIEF:  BROWN, SHORT. UK Chancellor
of the Exchequer Gordon Brown and International Development Secretary
Clare Short have challenged the IMF and the World Bank to stop dragging
their feet over debt relief for the developing world, reports the Guardian
(UK, 12/4, p.27).  Frustrated by the failure of any new countries to
receive debt relief since the G7 summit in Cologne, the chancellor and the
international development secretary demanded in a letter that the
organizations act "immediately" to avoid a public relations setback for
the Highly IndebtedPoor Countries (HIPC) debt relief initiative.

The letter was sent in the past few days to retiring IMF Managing Director
Michel Camdessus and World Bank President James Wolfensohn.  It follows
the US Congress's failure to agree full funding for America's share of the
proposed $2.1 billion trust fund to be used by the World Bank and regional
development banks to cover the extra costs of more generous terms for
impoverished nations.

The two ministers acknowledge that Congress's decision was a "major
disappointment" which leaves a funding gap of $600 million in the
initiative.But they say that after consulting intensively with European
and G7 colleaguesthey are sure other countries' commitments remain in
place.  In particular,theysay the $1 billion contribution promised by the
European Commission for African,Caribbean and Pacific countries will be
agreed this month, having been rubber-stamped last week in Brussels.

Regardless of the funding gap opened up by America's unwillingness to make
its full contribution to the trust fund, Brown and Short say the IMF and
the World Bank should "move ahead immediately for those countries where
creditors have funding in place." Brown, who will discuss the HIPC with
Wolfensohn and Camdessus during a visit to Washington this week, is
optimistic the US can be persuaded to increase its contribution in due
course.

Separately, the Wall Street Journal (p.A31A) reports that besides size,
the key thing that separates the current effort at debt relief from past
plans is the requirement that savings be used to address social ills.  In
part of this effort, the World Bank has made Bolivia-where the average
person earns just $1,000 a year and two-thirds of the 7.9 million
population live in poverty-a model for getting local groups involved in
deciding how to spend scarce resources to raise living standards.

La Cuchilla childcare and health center is an example of how that can be
done.The clinic, one of 32 nationwide funded by the US, World Bank,
Bolivia and others, offers free preventive medicine for needy children,
subsidized by feesit charges for medical treatment. In addition, the
center provides day-care for less than $1 a day.





US PLANNING TO PROPOSE CHANGES IN IMF POLICY.

With the IMF under attack in the US Congress, the administration of
PresidentBill Clinton plans to propose significant changes in the way the
internationallender does business, report the Wall Street Journal (p.A4)
and the Wall Street Journal Europe.  US Treasury Secretary Lawrence
Summers is expected to call on the IMF to focus more on emergency lending
than on helping ailing economies through long-term revolving loans.

Summers expects to begin making his views public in time for them to be
discussed in Berlin on December 16 at the inaugural meeting of the
so-called Group of 20, a new international forum for discussing global
economic issues,the story says.  IMF member countries still would have to
approve any such proposals.

The US administration believes this is a propitious time to take a new
look at the IMF, says the story.  The financial crisis that swept the
world over the past two-and-a-half years has largely subsided, and IMF
Managing Director MichelCamdessus, who led the Fund's response to that
crisis, has announced his intention to step aside for a still-unnamed
successor.  The move could help quiet criticism of the IMF in the US
Congress, where Clinton had a rough time winning approval earlier this
year for the IMF to use its gold holdings to funddebt forgiveness for poor
countries.

"I've said many times the IMF is indispensable, but that doesn't mean we
have to be satisfied with the one we have," Summers is quoted as saying on
Friday. He swapped views on the issues in private meetings last week with
the economic team of Argentine President-elect Fernando de la Rua in
Buenos Aires, and in Rio with Brazilian Finance Minister Pedro Malan and
Central Bank President Arminio Fraga.Both countries are members of the
G-20, created in the wake of the financial crisis to give rich countries
and major developing nations a place for informal debate of global
economic issues.

Beyond the Berlin G-20 meeting, the US hopes Summers's ideas will help
guide the continuing campaign to redesign the world financial system to
prevent and shorten future crises.  The US Treasury hasn't released
details of the plan, but Summers is likely to suggest that IMF members
consider focusing its lending more on emergency situations, such as recent
crises in Thailand, Ecuador and Brazil in recent years, rather than on
recurrent loans to troubled economies, which US officials believe is
better left to the World Bank.