IMFC press conference: Search continues for debt relief accord

• Pages: 285-286

Page 285

"There is now a growing consensus that multilateral debt relief has to be dealt with as soon as possible," Brown told reporters. Most debts now owed by Heavily Indebted Poor Countries (HIPC) are to the IMF, the World Bank, and the African Development Bank. The United States has proposed to write off all multilateral debt owed by poor countries to these three institutions, he said, and many more countries agree that the next stage of dealing with the debt overhang involves the total cancellation of multilateral debt (under the current HIPC Initiative, 50 percent or less of debt is cancelled). But funding for multilateral debt relief would have to come from a new mechanism and must not substitute for existing resources, Brown said.

Currently, 27 highly indebted poor countries are receiving debt relief under the HIPC Initiative. Brown noted that the IMFC has decided to top up relief for some of these countries and extend the life of the HIPC Initiative for another two years to keep the door open for those countries that are eligible but have not yet applied for debt relief.

When asked if there was support for the proposal to revalue the IMF's gold holdings as a means of financing multilateral debt relief, Brown said the Group of Seven had agreed to further discuss the Page 286matter. "I don't think most countries have any ideological objections and, of course, the revaluation that was done in 1999 sets a precedent. If we are going to solve the problem of multilateral debt, we have to find an innovative way, and I have no doubt that it will come back to the use of gold in the case of the IMF," he said.

An off-market gold transaction was carried out in 1999 to finance the IMF's participation in the enhanced HIPC Initiative. "What we are suggesting now is not exactly the same," Brown said, "but we believe that there can be some investigation of market transactions." He noted that the current value of IMF gold- about one-eighth of its market value-provides considerable scope.

For its part, the United Kingdom is proposing to help pay for the cost of providing 100 percent multilateral debt relief for the poorest countries by paying its share-amounting to about 10 percent- of these countries' debt service owed to the World Bank and the African Development Bank until 2015, Brown said. His country was also still building support for its proposal to create an International Finance Facility...