Global Policy Forum

By Mark Egan

President Clinton pledged Wednesday the United States would forgive all debts owed to it by impoverished countries, challenging other rich nations to be equally generous.

Clinton, speaking at the annual meetings of the International Monetary Fund and World Bank said it was ``an economic and moral imperative that we use this moment of global consensus to do better'' for the world's poorest countries. ``Today I am directing my administration to make it possible to forgive 100 percent of the debt these countries owe to the United States,'' Clinton said.

Clinton's pledge, which was conditional on countries using the debt forgiveness to finance basic human needs, was received with a standing ovation by those in the auditorium. The commitment was the first of its kind from any of the Group of Seven industrialized nations. The G7 set the terms of the Heavily Indebted Poor Countries debt-relief scheme at a meeting in Cologne in July.

Financing for the $27.4 billion plan was announced at the IMF/World Bank meetings Monday. The Cologne plan called for rich countries to forgive 90 percent of their debts but critics continued campaigning for total forgiveness.

``Unsustainable debt is helping keep too many poor countries and poor people in poverty,'' Clinton said. ``I do not think we can say in good conscience that we support the idea that (poor countries) should choose between making interest payments and investing in their children's education.''

Summers Wants Others to Join

U.S. Treasury Secretary Lawrence Summers told reporters after Clinton's speech that the United States would welcome other rich nations to join in the effort. ``We will certainly be seeking others to join us,'' Summers said.

Following Clinton's speech, advocates for debt relief were ecstatic. Jubilee 2000, a coalition which has been dogged in its push for complete debt forgiveness, said that the G7 should now work out a deal to match Clinton's pledge. ``This announcement changes everything,'' Jubilee 2000 Director Ann Pettifor said. ``In order to meet the president's challenge to 'do better,' the world's leaders must meet again before the millennium.'' The group, which boasts the Pope, rocker Bono, noted Harvard economist Jeffrey Sachs and many U.S. lawmakers among its supporters, has been pushing for the debt forgiveness as a gift for the poor on the eve of the new millennium.

Clinton said funding for the expanded debt relief was included in his request to Congress last week for almost $1 billion to fund the U.S. contribution to debt relief.

$5.7 Billion Owed US

The countries in question owe the United States about $5.7 billion. But since the debt is valued at much less than its face value, the entire amount could be financed with the $1 billion budget request, Summers said.

The IMF/World Bank meetings have centered on the need to ease the debt burden for the world's poorest countries and find ways to reduce grinding poverty. At the meetings, the IMF has gone to great lengths to display a softer, more caring approach, announcing it would make poverty its focus in future and cooperate more with the World Bank.

Earlier, developing countries welcomed the new desire to help poor countries tackle their debt and poverty crisis. Francisco Aguirre-Sacassa, Nicaragua's ambassador to the United States, told Reuters that debt relief ``is one of the critical economic issues.'' ``For a country like Nicaragua, where debt is three times our gross domestic product and we spend five times more to service debt than we do on education, HIPC is critical.''

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