- The Washington Times - Sunday, September 25, 2005


Financial leaders, wrapping up three days of talks in Washington yesterday, nailed down a landmark plan to wipe out poor countries’ debt and explored ways to limit the fallout from rising energy prices.

The gap between rich and poor nations is widening amid fresh concerns that high energy costs, exacerbated by two hurricanes on the Gulf Coast, could affect global growth.

In their meetings, financial officials from around the world agreed on debt cancellation, developed a strategy on energy prices, and struggled with other economic issues.

The 184-nation International Monetary Fund (IMF) and the World Bank held weekend sessions, while the world’s seven biggest industrial powers met as a group Friday.

The debt plan could allow poor nations to increase spending on fighting poverty, improving education or buying drugs for HIV/AIDS or malaria.

The World Bank’s steering committee endorsed the debt-cancellation deal yesterday, one day after action by the IMF.

“The path to complete debt relief has now been cleared,” World Bank President Paul Wolfowitz said. The action represents “significant progress in fulfilling our promise to the world’s poorest people.”

A product of intense international negotiations over the course of years, the plan would forgive an estimated $40 billion worth of debt for at least 18 poor countries, most of them in Africa.

“It’s gratifying to see our persistence and commitment pay off,” Treasury Secretary John W. Snow said.

The money is owed to the IMF, the World Bank and the African Development Bank. The Group of Eight economic powers is pledging to underwrite the debt plan by covering the lost loan payments.

As many as 20 other countries could receive relief if they meet certain conditions. That would push the total amount of debt cancellation to more than $55 billion, to be spread over decades.

“Alleviation of that debt will help achieve a substantial poverty reduction,” IMF chief Rodrigo Rato said.

Mr. Snow predicted the boards of the World Bank and the IMF would approve the debt initiative within a week.

Anti-poverty groups, which were pressing for the debt plan to be hammered out this weekend, hailed the action.

“This debt deal will benefit tens of millions of the poorest people on the planet,” said Irish rocker and anti-poverty campaigner Bob Geldof, who organized the Live 8 concerts this year to put a spotlight on fighting global poverty.

Getting the debt agreement nailed down was seen as an important first test of Mr. Wolfowitz’s leadership. He took the helm of the World Bank on June 1. Before that, he served as the No. 2 official at the Pentagon and was an architect of the Iraq war.

On the energy front, finance officials pledged to increase supplies, promote conservation and improve the release of timely data on oil production as a way of reducing wild price swings in energy markets.

Officials “recognized with oil that a global problem requires a truly global solution, with concerted action from oil producers and consumers alike to take steps necessary to stabilize the market,” said Gordon Brown, Britain’s finance minister.

The meetings, Mr. Brown said, take place “at a time of greater risk for the global economy, facing the highest sustained oil prices for a quarter of a century.”

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