Plan would help pay Third World debt

Britain to propose giving some money owed to agencies

September 26, 2004|By NEW YORK TIMES NEWS SERVICE

LONDON - Britain is planning a new effort to help poor countries reduce their huge debts by offering to pay off 10 percent of the total owed to international agencies and challenging other nations to follow suit, said Gordon Brown, the chancellor of the Exchequer.

In an address today to an advocacy group called the Trade Justice Movement, Brown also plans to repeat an earlier proposal that the International Monetary Fund revalue its vast gold reserves, now priced at a tenth of their market value, and use the proceeds to cancel some Third World debt, according to the a text of his remarks published yesterday in the Guardian and later confirmed by the Treasury.

The issue is rising once more on the international agenda because a previous mechanism for debt relief, set up in 1996 by the World Bank and the International Monetary Fund, is to be renewed in December for two years.

James D. Wolfensohn, the president of the World Bank, said Friday in Washington that the White House had devised a plan to cancel some Third World debt, Reuters reported. Sen. John Kerry, the Democratic presidential challenger, has also promised to lead efforts to cancel debts of impoverished countries if he is elected in November.

Brown's proposal comes just days before the annual meetings of the World Bank and the International Monetary Fund in Washington. The finance ministers of the Group of Seven major industrial nations, including Brown, are also to meet just before those gatherings.

"What we hope is that this will break the logjam that has been there for some time," said Brendan Cox, a spokesman for Oxfam, a nonprofit group that has urged moves to cancel Third World debt. "If others follow suit, it will be a massive turning point in efforts to end the burden of international debt."

Brown plans to tell the meeting of anti-debt campaigners today that Britain will set aside the equivalent of $180 million a year to pay off 10 percent of the money owed by 32 countries to international lenders, notably the World Bank and the African Development Bank. Poor nations contend that they often must choose between paying these debts and meeting urgent needs of their people, or making expenditures that would strengthen their economies.

"Because the poor cannot wait, we intend to lead by example by paying our share of their payments to the World Bank and the African Development Bank," Brown is planning to say. "We do this alone today, but we urge you to use your moral authority to urge other countries to follow suit so that poor countries can look forward to a future free from the shackles of debt."

Brown will also argue that the debt owed to the International Monetary Fund could be cut by a revaluation of the fund's gold stocks, worth $8.5 billion when valued at $40 per ounce. The market price for gold is now more than $400 an ounce.

His speech will be given as part of the preparations for the annual conference of the governing Labor Party in Brighton, in southern England.

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