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Posted on Sat, Nov. 18, 2006
IDB OK's massive debt relief package for five nations
Inter-American Development Bank has agreed to a massive debt relief for poor nations.
BY PABLO BACHELET
WASHINGTON - The Inter-American Development Bank on Friday accepted a U.S.-promoted proposal to pardon between $2.1 and $3.5 billion for five poor Latin American nations including Bolivia, a nation that opposes U.S. policies.
The Bush administration has been pushing for the relief since March, when it proposed the operation despite resistance from several Latin American countries because of concerns that the write-off would weaken the IDB's ability to provide subsidized loans in the future, officials said.
The Latin American nations wanted the United States and other wealthy countries to help pay for the operation, but Washington argued that the IDB was strong enough to take the hit.
The delay meant that the IDB did not join the World Bank, the International Monetary Fund and the African Development Bank in announcing last year a similar debt relief operation for poor countries from other regions. The IDB is the biggest official lender in Latin America.
''This is great news for the more than 30 million people in these five countries,'' said IDB President Luis Alberto Moreno.
U.S. officials were clearly pleased at the result of the meeting Friday, as it will help soften the Bush administration's image in Latin America as a hard-edged promoter of open-market policies and free trade.
Bolivian President Evo Morales has sharply criticized U.S. policies as ''imperialistic,'' and Nicaragua is set to be governed by old-time Sandinista foe Daniel Ortega, also a left-wing critic of Washington.
''The United States has been a leading voice for such an initiative,'' said the Treasury Department's assistant secretary for international affairs, Clay Lowery, ``and today's agreement on a way forward is a critical step in that effort.''
The deal left some significant details to be worked out later, U.S. and bank officials say.
The IDB board of governors did not decide on the critical matter of when the debt relief will kick in -- something that could add or subtract hundreds of millions of dollars from the package. The Bush administration wants a more generous Dec. 31, 2004, cut-off, which would work out to the $3.5 billion relief.
This would mean Bolivia will obtain $768 million in debt relief, Guyana $365 million, Haiti $468 million, Honduras $1.1 billion and Nicaragua $808 million.
IDB's managers and other countries have suggested earlier dates, potentially reducing the package to $2.1 billion, according to numbers provided by Jubilee USA Network, a nonpartisan group that advocates for poor-country relief.
Top IDB officials will meet again in January in Amsterdam to finalize the agreement. A signing ceremony is expected in March.
Nations must first obtain the IMF's seal of approval for their economic program, something Haiti still lacks. But U.S. officials expect this to happen soon.
Once Haiti gets the agreement, the country would receive as of yet unspecified benefits beyond what the other four countries will obtain, given its position as the hemisphere's poorest nation, the Treasury Department said.
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