World Bank chief says debt relief would "screw up" market
MANILA, Feb 26 (AFP) - Using Christianity's Jubilee year as a platform to press for debt relief for the world's developing countries is "whimsical" and could "screw up the market," World Bank president James Wolfensohn said here Saturday. "The issue of debt forgiveness is really quite an interesting issue (because) there are two trillion dollars in outstanding debt to developing countries -- that's 2,000 billion dollars -- included in which is the Philippine debt," Wolfensohn told a news conference here.
"The notion that for the Jubileum for someone to come along and forgive that debt is whimsical," he said. The Roman Catholic church is celebrating the 2,000th birthday of Jesus Christ. Some church leaders and church-based pressure groups have called for debt write-off for poor countries by lending institutions, including the World Bank, to mark the celebrations.
Writing off these debts could put pressure on multilateral lending institutions' capitals and in the longer term "screw up the market" for debt instruments, Wolfensohn said. Wolfensohn recalled he recently asked a church leader advocating debt relief to "forgive" some 100 million dollars worth of World Bank bonds he knew the church was holding, but instead got an "ambiguous reply." While there is a "lot of passion" about debt forgiveness, Wolfensohn said governments that own the World Bank and other lending agencies were not prepared to raise the limit of the money they contribute as funds. "The reality is the limit of debt forgiveness is the limit of the governments that own us. The owners, the governments, are simply not prepared to give up more than what they are (giving up) now," he said. Last year, leaders of the world's eight richest nations agreed to slash some 70 billion dollars off the 214 billion dollar debt of the world's 41 poorest nations, which debt relief pressure groups said was not enough. "If you have a society based on debt forgiveness, who's going to invest in debt anymore? So you really screw up the market," Wolfensohn said.
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