OTTAWA -- An incensed Paul Martin headed to Washington last night to demand immediate action from rich countries on the worsening problem of Third World debt.
"We need to really push it," he said in a phone interview yesterday from Halifax.
Mr. Martin has been a leading advocate of an initiative from the World Bank and the International Monetary Fund to forgive the bilateral debts of the world's poorest countries.
But the Finance Minister was shocked at a World Bank-IMF update on the initiative this week that showed disappointing results.
Under the program, countries have to qualify for debt-forgiveness by proving that they have policies and programs in place to make their economies stable, and very few countries have reached that point, the report said. Progress in meeting World Bank-IMF criteria has been far slower than expected, the report adds.
According to Mr. Martin, one of the more outrageous findings in the report described how some creditor countries, in the hopes of recouping a portion of their money, were selling off some Third World debt to private-sector vulture funds at a discount, instead of forgiving the debt outright. The vulture funds then demand full payment from the poor countries, Mr. Martin said.
The practice "violates" the spirit of the debt-forgiveness initiative, he added angrily.
When he meets with other finance ministers and central bankers from the Group of Seven industrialized nations in Washington today, he will be calling for a thorough review of the debt-forgiveness initiative.
He will also argue that the G7 take a lead on the issue by adopting a bold stand this weekend in the finance ministers' final communiqué, that they act immediately to give poor countries the expertise to manage their debts and that they put an end to the selling of poor countries' debt to vulture funds.
He also wants to make sure other creditor countries follow Canada's lead by announcing a moratorium on interest charges for any country that qualifies in principle for the debt-forgiveness initiative. This is an interim step before the debt is actually forgiven. That way, even if the countries have not fully implemented their debt-fighting policies, but have indicated they have a viable plan in the works, they will not have to worry about carrying a huge debt load, Mr. Martin said.
But the non-governmental aid organization Oxfam says the G7 has the power to go much further.
Since the World Bank and the IMF get much of their mandate from the G7, the group could use the Washington meeting to tell the institutions to relax the stringent rules and conditions they place on poor countries in order to qualify for debt forgiveness, said Mark Fried, spokesman for Oxfam Canada. The G7 could also tell the IMF to sell parts of its gold reserves to pay off some of the poor countries' debt, he said. The G7 nations could also cough up some money on their own, he added.
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