[CrashList] BBC: IMF pushes for debt relief
jones118 at lineone.net
Thu Sep 21 01:28:17 MDT 2000
The new head of the International Monetary Fund has said he wants to
bring debt relief to as many of the world's poorest countries as
possible, as quickly as possible.
Horst Köhler also defended the IMF's role in resolving global crises,
but said he recognised many of the worries about globalisation.
Mr Köhler told the BBC that he would be listening to the protesters,
but he would be telling them that globalisation has also brought the
benefits of economic growth.
Horst Köhler: Calling for action to help poor countries
He said that the international community faced two big challenges -
making sure that the risks as well as the benefits of global capital
markets were taken into account, and ensuring that globalisation
worked for all, especially for the poor.
Mr Köhler is attending his first annual meeting of the IMF in Prague,
where widespread protests about the impact of globalisation are
expected at the weekend.
Many of the protests will be about the slow pace of debt relief for
the very poorest countries, who are no longer able to pay.
He said that the most concrete expression of the new concern by the
IMF and the World Bank was its plan to speed debt relief, with 20
countries out of 41 eligible receiving a decision by the end of the
But many non-governmental organisations say that the IMF has still not
committed enough of its own resources for debt relief, and argue that
the process of relief is still too uncertain.
Oxfam's Tony Burdon told the BBC he feared that the IMF would not make
any further concessions, having already failed to meet its original
Mr Köhler said, however, that debt relief was not the quick road to
poverty reduction some people wanted.
Mr Köhler went out of his way to emphasise the downside as well as the
benefits of the global economy.
The Jubilee 2000 international pressure group wants debt relief
pledges to be honoured
He said the biggest challenge for the world was bridging the huge
inequality gap between those areas which had been left out of global
growth, and those which had seen an unprecedented increase in income
Mr Köhler also warned that the growth of massive private capital flows
to developing countries, while ultimately beneficial, carried some
real risks of a bigger financial crisis when those funds were suddenly
Defending the euro
The IMF managing director also went even further than his chief
economist in stating that the euro was "massively undervalued" on
international currency markets and that the subject of intervention
should not be "taboo".
He said that the IMF had to pay attention to the exchange rate, and
should not be afraid to speak its mind.
On Tuesday the IMF warned that a sharp adjustment in the exchange rate
of the euro could pose a big threat to the world economy.
But currency markets were sceptical about any intervention by the
major industrial countries ahead of the US presidential election in
The euro continued to fall to record lows on international currency
Action by rich countries
Mr Köhler also called for action by rich countries to help the poor,
especially by opening their markets to developing countries' products,
and also by providing more government aid.
But he said the oil crisis could have its biggest impact on developing
In a BBC interview, he said that the oil price rise "cast a shadow"
over the bright prospects for economic growth in the next two years.
While there was no need to panic, it was the non-oil developing
countries who would suffer the most if oil prices stayed high.
He called on developing countries to ensure good governance and an end
to corruption as crucial pre-conditions for progress on ending
Private sector role
Separately, the IMF executive board has issued a statement saying it
is satisfied with plans for the private sector to play a greater role
in reform, but said it was up to individual countries to negotiate
individually with creditors.
"There has been welcome progress towards a convergence of views
concerning the circumstances in which the use of IMF resources would
be conditioned on action to secure private sector involvement," it
The IMF aims to provide financial support to crisis-hit governments.
But it has been criticised for encouraging unwise lending by private
banks who feel secure in the knowledge that the IMF will always bail
out a country in financial difficulties.
Mr Köhler, the first German to hold the post of IMF managing director,
was selected after an acrimonious process earlier in the year which
caused the post to be vacant for several months.
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