WASHINGTON --January 14 -- Following the agreement by the Paris Club on a moratorium on some debts owed by countries affected by the Tsunami, Jubilee USA Network and the American Friends Service Committees Life Over Debt Campaign today released a report which finds significant the World Bank has significant funds available to contribute towards full and permanent debt cancellation for both nations such a Sri Lanka which were affected by the Tsunami and impoverished nations struggling with the HIV AIDS pandemic and other natural disasters.
The report released today was written by Sony Kapoor, a senior adviser to Jubilee USA Network and Jubilee Research in London. It finds that the World Bank (IBRD) can safely mobilize $10 billion of reserves to fund cancellation, and could commit an additional $7.5 billion in future profit up to 2020.
The nations affected by the Asian Tsunami need more than a moratorium they need full debt cancellation. Nations like Sri Lanka and dozens of impoverished nations across Africa, Asia, and Latin America face tremendous debt burdens and must receive 100% multilateral debt cancellation. The report we are releasing today shows that World Bank has ample resources to fully cancel the debts for impoverished nations, and should do so without delay, said Neil Watkins, National Coordinator of Jubilee USA Network.
The report rigorously addresses the concerns raised by Bank staff and shows how the AAA credit rating critical for the operations of the IBRD will not be affected in any way. The report goes much further to show that neither the borrowing nor the lending rate for World Bank (IBRD) borrowers will change.
We have highlighted a financially sound mechanism for part financing IDA debt cancellation through IBRD resources without any tangible impact on countries that borrow from the IBRD said Sony Kapoor, the author of the report.
Kapoor, who also wrote the influential paper that showed how IMF gold sales could generate $35 billion for debt cancellation, said It is unacceptable that the IMF and World Bank are sitting on top of more than $50 billion of spare money when millions of people are dying everyday for a want of basic needs. Every day of delay in providing debt relief has unacceptable human costs. He has also sharply criticized the IMF for being financially inefficient and wasting scarce resources by sitting on the gold.
G-7 Finance Ministers will meet on February 4-5 in London to discuss additional measures towards multilateral debt cancellation, and the US and UK governments have come out in favor of 100% multilateral cancellation. But serious disagreements exist between these governments and others over how to pay for such a deal. The proposals elaborated in the report identify options for financing that could serve as a compromise approach.
A copy of the report is available upon request from the author at email@example.com and will be available on the Jubilee USA Network website on January 17, 2005.
The report was released at the 'Dropping the Debt - Footing the Bill' seminar organized jointly by CEPR, Jubilee USA and Inter Action in Washington DC yesterday