WASHINGTON: US legislators are examining a new bill that would completely cancel the debts that poor countries owe to the International Monetary Fund (IMF).
The Jubilee Act would require the US Treasury to work with multilateral lenders to achieve 100 per cent cancellation of the debts of 50 nations, mostly in Africa, Latin America and Asia.
The Washington-based IMF would be asked to finance the debts from its own resources without imposing additional conditions on the debtor nations. In the past, the Fund has typically compelled borrowing countries to agree to certain conditions before receiving their loans.
They include: balancing their fiscal budgets, devaluing their currencies, implementing anti-inflation monetary measures - such as high interest rates - and imposing tighter lending policies.
"We believe this is actually ground-breaking legislation because it would be the first time that the US would call on the IMF to cancel 100-per cent of debt for more than just the usual suspect countries, for a total of 50 countries, and from their own resources," said Marie Clarke, national coordinator of Jubilee USA Network, one of the anti-debt groups behind the bill.
"The cancellation of debts owed to the IMF would remove a major impediment to poverty eradication and economic growth in Asia, Africa and Latin America, and enable the nations to invest their own resources in health care, education and poverty reduction," she added.
The bill's five congressional backers include Republicans - from the party of President George W Bush - in the House of Representatives, who have traditionally opposed such legislation, including Jim Leach and Spencer Bachus, who is also a member of the Committee on Banking and Financial Services.
The Jubilee Act, whose full name is The Justice and Understanding By IMF Loan Elimination and Equity Act, must be approved by House of Representatives committees before it can proceed to the public hearings required before it becomes law.
"The Jubilee movement opened our eyes to the fact that countries such as Zambia, Tanzania and Nicaragua spent more on debt service payments than they spent on health and education combined," said Representative Maxine Waters, one of the five politicians who sponsored the act.
Clarke says passing the bill would send a signal to other western governments. "Certainly if the US works to make a strong call at the institutions, we think that the European nations would get behind the US and also call for complete cancellation by the IMF."
"We cannot presume to know that for sure at this point. But the expectation is that the US, with such a strong powerful voice in the IMF, would really set the tone for debt cancellation."
The United States is the biggest shareholder in both the IMF and its sister institution the World Bank. Jubilee says its activists will spend coming months encouraging other members of Congress to back the bill, so that it could be considered this fall, in time for the annual meetings of the IMF and the World Bank.
Anti-debt groups argue that poor nations face some of the greatest health and education crises of our time, and that without full debt cancellation, diseases like HIV/AIDS, combined with a lack of social services, will continue to kill many people in those countries. -Dawn/The Inter Press News Service.
