BE GETTING IMPATIENT WITH THE WORLD BANK AND INTERNATIONAL MONETARY FUND

10:30 AM Dec 5, 1995

BE GETTING IMPATIENT WITH THE WORLD BANK AND INTERNATIONAL MONETARY FUND
Ministers and other top officials of 11 western nations -- including the United States, Britain, France and the Nordic countries -- reportedly put Fund Managing Director Michel Camdessus on the spot at the two-day annual general meeting of the Global Coalition for Africa (GCA) in Maastricht, the Netherlands last week.

The GCA is a five-year-old forum of decision-makers from the international community and Africa who meet annually to discuss issues affecting Africa in an effort to reach consensus. It is currently co-chaired by Netherlands Cooperation Minister Jan Pronk, former World Bank president Robert McNamara and Botswana President Ketumile Masire.

Camdessus reportedly promised the meeting that the Bretton Woods institutions (BWIs) will have a concrete debt resolution proposal ready for the Bank-Fund meeting in April, 1996. But he offered no details.

The BWIs have lagged behind many of their dominant shareholders in the push to resolve the debt crisis facing the world's poorest countries, most of which are in Africa.

"We were rather surprised when they presented no concrete proposal at the last annual meetings (of the Bank and the IMF in October)," US Assistant Secretary of State for Africa George Moose, who also attended the Maastricht meeting, told IPS Friday. "We are looking to them for a clear solution," he said.

For its part, the US will press ahead with bilateral debt relief, said Moose. According to him, provisions for this have been made in the foreign aid component of the 1996 budget the Clinton administration is currently negotiating with Congress.

Debt, he said, is a real problem hindering reforms even in the African countries most dedicated to reform. This, he said, was recognised at the Maastricht meeting which was also attended by representatives of 45 African countries including six heads of state and multilateral organisations.

The GCA's co-chairmen proposed to Camdessus that the BWIs come up with an approach that ensures that the annual debt service of the poorest countries to the BWIs not exceed 20% of their export earnings, said Herman Cohen, currently GCA's executive secretary and Moose's predecessor at the State Department.

Although the MDBs account for only one in three of sub-Saharan Africa's 300 billion dollars of external debts, they now account for an increasing proportion of debt and debt service obligations, says the UN Economic Commission for Africa (UNECA.) Some 24 African countries, it says, currently owe upwards of 40 percent of their debts to the MDBs.

The MDBs do not reschedule debts and are preferred creditors. So, since 1988, ... for some African countries, almost all the debt service paid is to multilateral creditors, says UNECA. In 1991, for instance, debt service to the multilaterals took up 36 percent of the export earnings of Zambia and Uganda, says the commission.

This has been increasingly recognised by western countries some of whose finance ministers, notably Britain's and France's, have made different proposals to the MDBs. Britain's Kenneth Clarke, for instance, has long urged the Fund to sell a small portion of its vast gold reserves to liquidate or drastically reduce the debts of poor countries which are implementing BWI-approved loans.

A leaked World Bank proposal for an 11-billion-dollar trust fund to help reduce the debt raised a lot of publicity last September. So far, however, it has come to naught.

But Bank sources told IPS last week that work on a concrete proposal is well underway. One said the September proposal had been compromised by publicity and was, therefore, jettisoned.

Resolving only debts owed to BWIs will leave many African countries still shackled by debts owed governments and commercial banks. They account, respectively, for some 62% and 10% of total African indebtedness.

The GCA has therefore made comprehensive debt resolution -- by creditor governments, the MDBs and commercial banks -- and resource mobilisation for the continent a priority action area for the next five years.

There is too much debt pushed into the future, there is debt 10 years from now, 50 years from now, said Cohen. It is like a time bomb. It is a major obstacle to development and the debt overhang makes it difficult for African countries to get new loans, Cohen says.