Britain and US disagree on world debt relief
A solution to the crippling debt burden of poor countries has eluded finance ministers and central bankers from around the world, but there are expectations an agreement could be reached later this year.
Officials at the weekend meetings said they were making progress on debt relief. International aid groups derided the claim, saying the major industrialised nations were dragging their feet and worsening the plight of the poor.
The spring meetings of the World Bank and its sister institution, the International Monetary Fund, were preceded by a session Saturday of the Group of Seven major industrialised nations.
The G-7 – the US, Japan, Germany, France, Britain, Italy and Canada – said the global economy would continue to grow. They also endorsed debt relief.
The US and Britain have competing plans, but officials have failed to settle differences.
Britain has proposed an international finance facility to increase development aid by $50bn (€38.6bn) a year until 2015 through the use of off-balance-sheet financial instruments
The US has said its budget laws would not allow it to support Britain’s plan because it would bind future governments to providing money.
Some outside advocates want the IMF to sell part of its massive gold reserves to pay for the debt relief. The US does not favour that. Britain, the current chairman of the G-7, insists the idea is still on the table.
US and British officials sought to play down their differences and said they were encouraged by developments.
“I believe we are making considerable progress now on these issues,” said Chancellor Gordon Brown. “I think for the first time as a result of these meetings, that more money will have to be available.”
Under the US approach, the poorest countries would not have to repay loans to the World Bank, the IMF and the African Development Bank. The Bush administration also wants future aid delivered as grants, which do not have to be repaid, rather than loans.
“Our proposal not only drops the debt of yesterday, but prevents debt from burdening countries again well into the future,” Treasury Secretary John Snow said yesterday.
Critics say that deprives the lending institutions of additional money to compensate for loan repayments no longer required and they eventually will have less money to lend.
