G7 finance ministers meet tomorrow in Washington, DC, and they’ll consider plans for debt cancellation for the poorest countries. At least two proposals are being floated at the meeting.
A US plan calls for debt cancellation based on the sale of IMF gold supplies, while a British plan proposes that rich countries help pay off the debts.
Dean Baker is an economist and co-director of the Center for Economic and Policy Research in Washington. He spoke to reporter Joe De Capua about whether the Bush administration’s debt cancellation plan may be approved. He says, “I would be surprised. The Bush administration is clearly pushing for that, but at this point his administration has very little credibility with France and Germany, among others. You know, if he had laid more groundwork over the last six months or so one could imagine the possibility.” But now the economist doubts the other G7 nations would go along with it.
Asked what motivates the Bush administration to put forth the plan at this time, Mr. Baker says, “Well, it might be an opportunity simply to make, say, Germany and France, in particular, look bad because it is something that has a lot of support throughout much of the world; to my mind there is a very good argument for it. So the idea of giving these countries a break I think has an awful lot of common sense appeal.”
Mr. baker believes the US plan is feasible. “Absolutely. The IMF has been sitting on this. It’s grossly undervalued, the gold. I mean we’re looking at prices that were in place forty years ago. So absolutely.”
Joe De Capua, Voice of America, September 30, 2004