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International aid group says debt initiative in danger of failing

April 17, 1997

WASHINGTON (AP) _ A World Bank and International Monetary Fund plan to offer debt relief to 20 of the world’s poorest countries may collapse, the international aid group Oxfam said Thursday.

An Oxfam report urged World Bank President James Wolfensohn to ``breath new life″ into the initiative and accused IMF Director Michel Camdessus of ``developing foot-dragging on implementation into an art form.″

The report was issued to coincide with the two lending agencies’ spring meeting next week at which decisions will be made on the first countries to benefit from the plan, expected to be Uganda, Bolivia and Burkina Faso.

``The present debt initiative is in grave danger of becoming a monumental irrelevance,″ said Justin Forysth, Oxfam’s advocacy director. `` The World Bank president must confront his board with the simple message: `Back me or sack me on poor country debt.‴

The report also said the United States had joined Germany, Japan and Italy in using its influence to delay putting the plan into action and minimizing the level of debt relief provided.

Manfred Koerber, a spokesman for Germany’s central bank, said in Bonn it was wrong to say Germany was blocking the program. He said other countries were reluctant to make contributions to a fund to finance debt relief.

A senior Treasury Department official said there were a number of false assertions in the report.

``There are immense technical complexities involved, but there is no reason for alarm,″ the official said, speaking on condition of anonymity. ``The United States wants to move ahead.″

A World Bank spokesman, who also spoke on condition of anonymity, said Oxfam was entitled to its opinion but the bank board would decide what conditions were required for each country.

An IMF spokesman said he would not comment until he read the report.

The report said Uganda and Bolivia were now likely to have to wait one or two years for debt help despite good economic reform records.

``Most other candidates for debt relief will be placed on the back burner until 2000 and beyond,″ the report said.

Critics have long complained that the World Bank and the IMF worsen global poverty by insisting on debt repayment from countries already hopelessly burdened by obligations to their creditors.

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