IMF, World Bank promise more aid

Relief agencies seek more grants, debt cancellation

April 26, 2004|By Warren Vieth | Warren Vieth,LOS ANGELES TIMES

WASHINGTON - World finance leaders agreed yesterday on the need to continue canceling the debts of poor countries and to provide more aid in the form of grants rather than loans, but critics said their pledges fell short of what was needed.

The International Monetary Fund and the World Bank concluded two days of deliberations by declaring their intent to expand an existing debt-relief program and secure more funds to help developing countries achieve poverty-reduction goals.

The recommendations, endorsed by members of a joint policymaking committee, will be taken up by the full membership of the two institutions in the fall.

Nigerian Finance Minister Ngozi Okonjo-Iweala said Development Committee members wanted to extend the Heavily Indebted Poor Countries initiative beyond its scheduled expiration date of Dec. 31 so more countries could participate.

The program has provided about $50 billion in debt relief to 27 impoverished countries, most of them in sub-Saharan Africa. But an additional 11 potentially eligible countries have been left on the sidelines, in some cases because of armed conflict or political instability.

Panel members also embraced a U.S.-backed proposal to provide more development aid in the form of grants requiring no repayment, instead of extending new loans that perpetuate the cycle of indebtedness.

But they did not agree on the optimal level of grant financing, a subject of considerable debate among big lenders. The World Bank has expressed concern about the effect of more extensive debt cancellation or grant substitution on its ability to use debt repayments to make new loans to deserving countries.

The panel called on the developed world to do more to help poor countries make progress toward poverty reduction, warning that most of the Millennium Development Goals endorsed by global leaders four years ago were unlikely to be met by the target date of 2015.

The millennium objectives include reducing global poverty by half, achieving universal primary school education, promoting gender equality, reducing child mortality, improving health care and preventing environmental degradation.

Despite the declarations of concern and determination, some independent relief organizations said they were unimpressed by the outcome of the spring meetings.

On a 1-to-10 scale, "I'd give them a 7 for rhetoric and a 1 for action," said Oxfam International policy adviser Max Lawson, who criticized the institutions for not making a more explicit connection between debt cancellation and poverty reduction.

"They've made no commitment to link debt relief to the Millennium Development Goals," Lawson said. "They're two very separate things in the mind of the bank and the fund."

World Bank President James Wolfensohn accused the international community of getting its priorities backward, pointing out that global defense spending runs about $900 billion annually, farm subsidies in wealthy nations about $300 billion, and development assistance for poor countries only $60 billion.

The Los Angeles Times is a Tribune Publishing newspaper.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.