Wall Street Journal - March 1, 2000
Penny-Pinching Blamed For Hurting Relief Efforts
By MICHAEL M. PHILLIPS Staff Reporter of THE WALL STREET JOURNAL
WASHINGTON -- The American-led international debt-relief effort for poor nations is running low on money because of U.S. penny-pinching, Treasury Secretary Lawrence Summers said.
The result, Mr. Summers said, is that some reform-minded developing nations will have to divert scarce funds from education and health programs to pay off foreign debts.
"To put it bluntly, if we do not play our part in this area, debt relief for Bolivia, Guyana, Honduras and Nicaragua will not happen," Mr. Summers testified at a Senate Foreign Relations Committee hearing. For instance, Bolivia, which has won U.S. praise for its market-minded economic policies, could miss out on $35 million in debt relief this year and an additional $110 million next year, he said.
Mr. Summers blamed Congress's refusal to meet the administration's funding requests. Congress provided only about a third of President Clinton's $320 million request for fiscal 2000, and the administration is awaiting action on an unusual $210 million supplementary request for the year. The president has also asked for $225 million in debt-relief funds for fiscal 2001 and $375 million in advance appropriations for future years.
If the U.S. doesn't pay its contribution to the debt-relief effort, which President Clinton and his rich-country counterparts unveiled with great fanfare last year, Latin American countries will be especially hard hit. Those countries' debts to the Inter-American Development Bank are largely being reduced with U.S. funds. Most other industrialized nations are focusing more on cutting debts owed to the African and Asian development banks.
But Mr. Summers also warned that Mozambique, where heavy rains have left as many as one million people homeless and caused $70 million or more in damage, could see delays in getting promised debt relief because of the funding shortage. The country is expected to qualify for $250 million in relief over the next 20 years, on top of some earlier debt reductions.
"The U.S. has to contribute its fair share," said Seth Amgott, a spokesman for Oxfam America, an antipoverty group that has been in the forefront of the debt-relief issue. "It shouldn't take a flood in Mozambique to get people's attention."