September 30, 1999
Clinton Widens Plan for Poor Debtor Nations
President Clinton Announces American Effort to Forgive the Debt of Poor Nations
By DAVID E. SANGER
ASHINGTON -- President Clinton announced a major
expansion on Wednesday in the American effort to forgive the debt of the world's
poorest nations, saying those countries would not have to repay billions
of dollars borrowed from American
aid agencies if they could show the
savings were being used for education and fighting poverty.
Clinton's pledge to forgive 100
percent of debt of the world's most
indebted nations -- mostly in sub-Saharan Africa -- expands a previous commitment by the United
States in June to write off up to 90
percent of the money they owe. But
the process may take years, and it is
contingent on Congressional approval of a $1 billion debt-forgiveness
program that Clinton sent to
Capitol Hill last week as an amendment to his budget.
The reality, Administration officials say, is that many of the countries that will benefit from the program never had much hope repaying
more than a fraction of the $5.7 billion they currently owe the United
States Treasury. In fact, much of
that debt has already been written
down on the Government's ledger
books, reflecting estimates that the
United States was likely to recover
only pennies on the dollar.
Thus, by the magic of Washington's budget rules, the $5.7 billion in
debt can be wiped out with a Congressional expenditure of only $1 billion.
Still, it is far from clear that Congress will go along with the move,
especially as elections approach.
Clinton made the announcement at
the annual meetings of the World
Bank and the International Monetary Fund here, just as the two financial institutions were putting the finishing touches on a $50 billion debt-reduction program that involves
their own massive lending to poor
nations. Clinton's announcement, during a brief appearance in a
hotel ballroom where thousands of
delegates from around the world
were gathered, seemed to take many
"Today I am directing my Administration to make it possible to forgive 100 percent of the debt these
countries owe to the United States,"
Clinton said, "when -- and this is
quite important -- when needed to
help them finance basic human
needs and when the money will be
used to do so."
Later, speaking to reporters,
Treasury Secretary Lawrence H.
Summers said that Clinton's
move had "symbolic importance
that goes beyond its economic significance," especially in countries that
are choosing between paying off
their international loans or building
more schools or hospitals.
Clinton's program would initially aid countries like Uganda and
Mozambique, which have gone the
furthest in meeting requirements set
in 1996 for debt relief. But ultimately
it could help 34 more nations, from
Tanzania to Zambia and Ivory Coast
to Nicaragua and Honduras to rogue
nations like Myanmar, if they are
willing to meet the conditions.
Clinton did not extend his spirit of forgiveness, however, to one
country deeply indebted to and in
trouble with the I.M.F.: Russia.
Tuesday the head of the fund, Michel
Camdessus, said that "it would be
the height of irresponsibility to turn
our back on this great nation; we will
not do that."
He urged that all the allegations of
misappropriation of funds should be
weighed against seven years of "real
progress," and praised Russia for
continuing to develop a "modern
market economy." Camdessus'
comments, and the absence of balancing words of warning to Russia,
infuriated some White House officials who felt it undermined their
effort to send a stern message to
Clinton talked Wednesday
about Russia only as an example
that the Fund must heed as it reviews "its procedures and controls to
strengthen the safeguards" on use of