The United States’s determination to write off Saddam Hussein’s $90-billion debt has opened the door to a more generous deal for the most impoverished countries in Africa, the head of the World Bank said this week.
James Wolfensohn, the bank’s president, said in an interview with the The Guardian that President George W Bush’s insistence on putting post-conflict Iraq on a sustainable financial footing opened the way for a fresh look at debt relief for all countries.
Speaking ahead of a meeting of the bank and the International Monetary Fund (IMF) this week, Wolfensohn said it was ”inevitable that we have another look at how the whole global community can come together on debt”.
The US has been resisting calls from the developing world to re-examine the heavily indebted poor countries initiative (HIPC), designed to write off the unpayable debts of 42 nations, most of them in sub-Saharan Africa.
But Wolfensohn said the intellectual climate had altered as a result of the White House’s argument that the Iraqi people deserved a fresh start because their country’s debt burden was accumulated under a brutal dictator. He said many other nations could deploy the same argument.
The bank believes that many poor countries have been adversely affected since the launch of the HIPC by falling commodity prices or other external events, and will unveil a possible framework for revisiting debt relief at this week’s meeting. It expects the annual meetings of the bank and IMF in early October to press ahead with new proposals.
An early test of whether rich countries in the West are willing to offer a better deal to indebted countries will be the case of Ethiopia, due to be discussed by the bank and the IMF over the next couple of weeks. ”It is absolutely logical to look at countries where the numbers have changed,” said Wolfensohn. — Â