U.S. Wins Support for Third World Debt Plan

Bush Administration’s Third World debt initiative won key endorsements Tuesday from the two international agencies expected to implement the strategy, with officials from both groups pledging quick action to get debt relief under way.

Both Michel Camdessus, managing director of the 151-nation International Monetary Fund, and Barber B. Conable Jr., president of the World Bank, said they recognize the need for urgency in addressing the debt crisis.

Conable said any delay “could be devastating in view of the expectancies which have been created” about the prospect for a reduction in the $1.3-trillion Third World debt.

In a speech to the final session of the spring meetings of the IMF and the World Bank, Conable said the bank had created a joint task force to work with the IMF to speed the start of the new debt relief program.

Earlier, the top policy board of the IMF issued a communique endorsing the general principles embodied in the debt program unveiled by Treasury Secretary Nicholas F. Brady on March 10.

The approval was seen as critical since the Administration is counting on most of the financing for the debt relief scheme to come from the two lending agencies. The Brady plan seeks to resolve the debt crisis by encouraging commercial banks to voluntarily cancel a portion of the loans they have made to Third World countries in return for assurances from the IMF and World Bank of repayment on the remaining debt.

The Administration projects cutting the debt of 39 major debtor nations by 20% over the next three years with financing of about $12 billion each from the IMF and the World Bank.

IMF and World Bank officials refused to discuss specific amounts Tuesday, saying that much will depend on how many countries adopt the economic reforms that will be necessary to qualify for the debt relief.

A U.S. Treasury Department official, who spoke on condition that his name not be used, said it was likely that the Philippines would be the first country to qualify for debt relief.

Mexico and Venezuela have also been mentioned as early candidates for assistance.

Camdessus told reporters at a briefing that the IMF recognizes the need to move quickly to spell out just how the debt relief will work, in order to remove uncertainty in negotiations between debtor countries and creditors.

“Nothing is worse than uncertainty,” he said. “The sooner we can assemble a program and provide answers, the better the chance for success.”

One reason for urgency is the growing political turmoil in many emerging democracies in Latin America stemming from the debt burden and the stagnation in living standards in the region.

Riots left at least 270 dead in Venezuela in February after the government imposed new debt austerity measures.