WASHINGTON, 23 September 2005 — The World Bank and IMF leaders played down hopes yesterday for an imminent deal on debt relief for the poorest nations as tensions emerged among rich creditors over who will foot the bill. “We are committed to getting it done, and we expect real progress at these meetings,” World Bank President Paul Wolfowitz said ahead of an annual weekend gathering of the Bank and International Monetary Fund. But Wolfowitz also spelled out the scale of the challenge to make good on the debt cancellation pledge offered by the Group of Eight powers in July.
Asked about a time-frame, he said “the sooner the better” but added: “It’s a challenge to get that many countries together for a consensus. “But we have to get a consensus that we have the commitments necessary that this debt cancellation deal does not come at the expense of IDA and does not come at the expense of developing countries,” Wolfowitz said.
The International Development Association is the World Bank’s main lending arm. Campaigners and poorer nations have expressed concern that rich donors could scale back their contributions to the IDA as they cancel debts.
In July, the G-8 nations reached agreement in principle to cancel $40 billion in debt owed by 18 developing nations, nearly all in Africa. Most of it is owed to the World Bank with a small part owing to the IMF. The details were left to be worked out and talks are likely to be lively this weekend as creditor nations outside the G-8 debate who will be responsible for repaying the debt.
IMF Managing Director Rodrigo Rato said a deal could come “in the next few weeks” but not this weekend. “I think we will be able to reach a final consensus soon, in the near future,” he said. “I cannot give you a specific date but I certainly see that given the nature of the discussions we have had at the (IMF) board in recent days... that we should be able to have this in the next few weeks,” Rato said.
“I believe we will be able to have a framework for the Fund to pursue an initiative that would not be only a G-8 initiative but a Fund initiative backed by the board representing 184 countries,” he added. Campaigners say that rich nations not part of the G-8 are angry that they were not consulted before the elite powers made their announcement amid great fanfare at a summit in the Scottish golf resort of Gleneagles in July.
Belgium and the Netherlands, both major aid donors, are notably said to be unhappy with the G-8 deal, not necessarily because they oppose the principle of debt relief but because they want a big say in how it will happen.