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Archive for Monday, November 19, 2001

World Bank, IMF look to help poor countries

November 19, 2001

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— Concerned that the economic fallout from the Sept. 11 terrorist attacks has hit the poorest countries the hardest, World Bank and International Monetary Fund officials met Sunday to discuss debt relief and ways to reduce poverty in the developing world.

The meeting came a day after finance ministers from 19 countries and the European Union pledged to help countries at risk, including war-scarred Afghanistan and developing nations harmed by the global economic slowdown. While officials called the meeting of the World Bank and IMF policy makers a success, it produced no new steps to specifically address problems caused by economic stagnation worsened by the terrorist attacks.

With Argentina facing a possible debt default and Mexico considering an IMF line of credit designed to prevent an economic emergency, the IMF and World Bank policy makers said they would review existing programs to try to meet the challenges of a changed world.

"There is, I think, an almost uniform recognition that poverty and distress in one part of the world is poverty and distress in another," World Bank President James Wolfensohn said. "The notion of two worlds the rich and poor, or the developed and developing world collapsed with the World Trade Center."

A few dozen protesters demonstrated peacefully along police barricades outside the meeting, in contrast to the hundreds who marched through downtown streets on Saturday. Forty-one protesters were arrested during the weekend during marches and scuffles with police, who fired rubber bullets, tear gas and pepper spray Saturday when some demonstrators pushed through the barricades.

The protesters want world leaders to forgive Third World debt and stop the financing of projects they claim harm the environment or hurt the poor. They also demand that the IMF and World Bank create rules for international lending to avoid costly bailouts when countries default on bad loans.

Wolfensohn said he didn't mind the protests that continued to pursue IMF and World Bank meetings, but he added that he preferred "to have it as a debate instead of people in the streets because I don't think that serves a purpose."

In Argentina, the government appears close to an agreement with local creditors to replace much of its existing short-term debt with new, longer-term securities and reduce its 2002 payments by at least $4 billion.

While some warn the debt restructuring amounts to default, Canadian Finance Minister Paul Martin and U.S. Treasury Secretary Paul O'Neill expressed support for Argentine Finance Minister Domingo Cavallo's plans.

O'Neill told World Bank officials they need to embrace a more selective approach to lending and provide support to countries that can prove they will use loans to make progress in the fight against poverty. He also said the bank needs to be more "rigorous in measuring the results" of its lending.

Wolfensohn said O'Neill's remarks were a "fair challenge."

Saying poverty in the developing world is "something we can no longer accept," Martin called for richer countries to provide money to help poor nations create the conditions for growing free market economies such as proper banking and regulation systems, education for all and good health care.

Wolfensohn said an international conference to discuss Afghanistan will be held Nov. 27-29 in Pakistan, led by the World Bank, the U.N. Development Program and the Asian Development Bank.

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