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| Saturday, 2 October 2004 |
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IMF extends debt-relief intiative for poor countries to 2006 WASHINGTON, Friday (AFP) The International Monetary Fund has agreed to a two-year extension of a debt-relief initiative for poor countries that was scheduled to wind up this year, the IMF announced. It said the decision to extend the life of the Heavily Indebted Poor Countries (HIPC) initiative was taken earlier this month by the IMF executive board "to provide the opportunity for the remaining countries that could qualify to establish a track record that would allow their consideration for HIPC relief." The program was launched in 1996 by both the IMF and the World Bank to ease the debt burden carried by poor countries that agreed to implement IMF-backed economic reforms and to take steps to fight poverty. The World Bank has also agreed to the extension, a bank spokesman said. Meanwhile finance chiefs from the Group of Seven industrial powers struggled ahead of a meeting Friday to come up with a plan to ease the crushing debt burden on the world's poorest nations, amid growing calls for a 100 percent writeoff. US Treasury Secretary John Snow, speaking to reporters ahead of a meeting of G7 finance ministers and policymakers of the World Bank and International Monetary Fund, said more debt relief is needed, although he did not specifically endorse a British proposal to erase all debts from the poorest countries. "Grants and debt relief must be significantly increased - we are considering more options to do so, including those that would provide up to 100 percent debt relief and grants from the international financial institutions," Snow said. On Sunday, British Chancellor of the Exchequer Gordon Brown said his Labour government will unilaterally write off its share of debts owed to the World Bank and other development banks, and urged other wealthy nations to follow. The move provided fresh impetus to a movement to press the G7 along with the IMF and World Bank to find a way to wipe out the debts that are crushing many poor nations. But the rest of the G7, which includes Britain, Canada, France, Germany, Italy, Japan and the United States, have different ideas. One plan to tax international capital flows, advocated by presidents Jacques Chirac of France and Luiz Inacio Lula da Silva of Brazil, has been rejected by some G7 nations, notably the United States. Germany, meanwhile, has resisted efforts for a writeoff of debt. An IMF-World Bank joint program for Heavily Indebted Poor Countries has sharply reduced debt to more than 20 impoverished countries, most of them in Africa, but many advocates say it is not enough. "We know that the G7 finance ministers will discuss debt cancellation on Friday, and that any proposals have to be ratified at the annual meetings" of the IMF and World Bank, said Marie Dennis, co-chair of the Religious Working Group, a coalition of faith-based organizations. "We will be watching and waiting, hoping that these powerful people will at last take bold steps to free some of the worlds most impoverished people from debt slavery." Meanwile IMF and World Bank policymakers meeting here today seek to preserve a global recovery that risks losing momentum next year, dragged down by rising energy costs, lackluster activity in Europe and huge deficits in the United States. Delegates, central bank governors and finance ministers for the most part, are also under pressure to act more decisively to ease the debt burden carried by the world's poorest countries. The annual two-day meeting of the policy-setting committees of the two institutions comes as the world economy, according to the IMF, is in its best shape in nearly 30 years, with growth this year expected to hit five percent. "The challenge is to keep the recovery going and to keep it going for as many years as possible," IMF Managing Director Rodrigo Rato said this week. Rato said national economies may well have to adjust to higher interest rates along with rising oil prices, which reflect tighter supply capacity, robust demand and uncertainties brought on by fears of terrorist disruption. |
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