Al Gore promises new US funding for debt relief initiatives

Following close on the heels of the German government announcement of a new initiative on debt, US Vice-President Al Gore gave a further boost to the campaign to find a lasting solution to the international debt crisis. He said that the USA would provide “significant new US funding for poor, highly indebted nations” in the Clinton administration's budget proposals. He also expressed the hope that there would be agreement to sell and re-invest part of the IMF's $30 billion gold reserves in order to help pay the institution's share of the debt relief.

The Wall Street Journal (Europe) described Mr Gore as “riding a crowded wave—one nearly every European leader from Tony Blair to Gerhard Schroeder has scrambled to catch recently. The Asian crisis, the plunge in commodity prices and Hurricane Mitch have all hit poor, indebted countries hardest and produced calls for wealthy governments to do something. NGOs such as Britain-based Jubilee 2000—which advocates wiping the slate clean on third World debt by the turn of the millennium—have been highly effective in raising public support.”

The US is proposing that a total of $461 million be allocated for debt relief. $41 million of this will be as a supplement in the current financial year ($25 million for the HIPC trust fund and $16 million Paris Club debt relief for Honduras).

For next year's budget the proposal is for $120 million of new money, and $300 million from an existing multilateral trust fund (the US share in the Special Disbursement Account 2) to be allocated for debt relief. The $120 million will be made up of $50 million for a debt for environment swap, $20 million for the Paris Club and the Africa debt relief programme, and $50 million for the HIPC Trust Fund.

In addition Al Gore has confirmed US administration support for the sale of 10 million ounces of gold to cover IMF contributions to the HIPC programme. The complete turn-around in the approach of the German government should mean that gold sales are now firmly on the G7 agenda.