Finance Chiefs Fail to Agree on Debt Relief

World finance leaders, struggling to find a way to help the world’s poorest countries get out from under huge debts, did not reach agreement Saturday, but promised to devise a new plan by year’s end.

In a status report midway through weekend meetings of the International Monetary Fund and World Bank, British finance minister Gordon Brown cited a “growing consensus” among wealthy nations that additional debt relief must come quickly.

“We have now decided that we must solve this problem ... by the end of the year,” said Brown, who chairs the IMF’s main policymaking committee. “There has been considerable progress this weekend.”

Yet the pledges and counterproposals could not mask the discouragement of debt-relief advocates who had hoped a more concrete plan would materialize to lighten the debt load of the world’s poorest countries, most of them in sub-Saharan Africa.

“We are disappointed,” said Sony Kapoor of the New Economics Foundation in London, which is pushing for 100% debt cancellation. “The clock is ticking, and the suffering people in the poorest countries cannot afford to wait.”

The lack of tangible results extended to other areas as delegates from 184 nations received little more than vague assurances that key players would work to resolve their differences over issues from Iraq’s reconstruction to China’s currency.

The absence of enthusiasm was evident outside the meeting halls, where a subdued group of about 30 activists ended an all-night debt-relief vigil in a nearby park with a few chants, songs and testimonials.

It was a far cry from years past, when thousands of activists used the semiannual IMF and World Bank meetings as a forum for airing their grievances about the effects of globalization on the world’s poor.

This year’s protests were small, with participants numbering in the dozens. Organizers attributed the light turnout to increased police enforcement, the Sept. 11 attacks, the war in Iraq and this year’s presidential election.

“It’s been really hard since 9/11 to draw public attention away from terrorism,” said Genevieve Villamora, a 28-year-old District of Columbia resident who had participated in IMF and World Bank protests for the last four years.

On Saturday, protesters were far outnumbered by D.C. police and other security personnel, who barricaded a 24-block swath of downtown Washington in response to earlier intelligence reports that terrorists might target the IMF and World Bank buildings.

Although wealthy nations appeared unanimous in the support for the principle of Third World debt relief, they remained divided over the means.

Britain tried to solicit support for a plan to cancel all the debt owed the IMF and World Bank by 27 of the world’s poorest countries, using cash contributions from big creditor countries to cover most of the cost.

The United States said it was willing to consider plans to write off all the remaining debt. But it favored an approach that would not require big countries to make additional contributions and might leave the IMF and World Bank with less money to lend in the future.

A parallel dispute involves U.S. efforts to persuade other wealthy countries to cancel as much as 90% of Iraq’s foreign debt. Some big lenders, such as Germany and France, were said to be unwilling to write off that much of the oil-rich country’s obligations, particularly in the absence of progress on Third World debt relief.

Another plan to accomplish debt cancellation, endorsed by a coalition of 37 heavily indebted poor countries, suggested that rich nations’ contributions could be supplemented by selling off some of the IMF’s substantial gold reserves.

Debt-relief advocates say such gold sales would be sufficient to eliminate most of roughly $20 billion still owed to the two financial institutions. IMF officials said they were willing to consider the possibility but needed more time to study it.

Rwanda Finance Minister Donald Kaberuka said additional debt relief was sorely needed by poor countries such as his. Although Rwanda’s annual debt payments have been cut in half under an existing IMF and World Bank program, they still divert money that could be put to better use fighting poverty and disease, he said.

“We’re still paying about $20 million a year in debts,” Kaberuka said. “That is equal to the entire budget of the Health Department.”