Brown presses for faster action on debt

Gordon Brown yesterday urged the West to speed up plans to cancel debt owed by Third World countries, as the meetings of the International Monetary Fund and World Bank looked set to end without any firm progress.

The Chancellor said he had used the meeting of the finance ministers of the Group of Seven countries to press for action on plans to cancel debt and relieve poverty in the most highly indebted poor countries (HIPCs).

"We called for action to be taken to ensure that we can help countries through the HIPC process. We said it was vital to secure the needed financing for the initiative. We urged other creditors of HIPC countries to follow our move to grant 100 per cent relief" Mr Brown said.

In a communique after the G7 meeting ended in the early hours, the ministers said: "We urge the IMF, the World Bank and eligible countries to co-operate closely to secure the implementation of HIPC, with the aim that the eligible countries reach their decision point by the end of 2000."

Mr Brown helped to secure the deal known as the enhanced HIPC initiative, in which 24 nations are scheduled to start receiving relief money by year-end. But the process has ground to a halt because of difficulties in ensuring that the money saved will be used for poverty relief.

As The Independent reported on Saturday, a planned IMF announcement of the first tranche of money for Uganda was cancelled after it emerged that President Yoweri Museveni had used $30m to buy a private aircraft. Mr Brown told reporters: "There will be a review of the Uganda situation but, of course, our aim is to move debt relief forward where there are no barriers to prevent us. But the savings from debt interest payments must be used for poverty reduction."

A spokeswoman for Jubilee 2000, which seeks the cancellation of the unpayable debts of 52 countries, said she was disappointed at the lack of progress. "They have got bogged down in the nitty-gritty, but have lost sight of the fundamental flaws in the HIPC process."

The failure to cancel the $216bn of debt owed by developing countries is a central complaint of the thousands of protesters who yesterday paraded through Washington carrying "Drop the debt" banners.

A former chief economist of the World Bank yesterday launched a scathing attack on its sister organisation, the IMF, describing it as an undemocratic and secretive body staffed by "third-rank economists from first-rate universities".

Joseph Stiglitz, who worked at the World Bank during the financial crises in Asia, Russia and Brazil, wrote in New Republic magazine that the IMF had made Asian countries carry out policies that made the recessions worse. "I saw how the IMF, in tandem with the US Treasury Department, responded. And I was appalled. All the IMF did was make East Asia's recessions deeper, longer and harder." Professor Stiglitz said the demonstrators in Washington, who say the IMF makes life worse for people of the developing world, "have a point".