Nations press ahead on debt relief

WASHINGTON – Concluding two days of talks, finance officials from the leading economic powers pressed ahead Sunday on efforts to wipe out poor nations’ debts and hoped to complete a deal later this year.

Officials insisted they were making progress. But international aid groups, disappointed by the failure to finalize an agreement this weekend, accused the major industrialized countries of dragging their feet and said further delay could worsen the plight of the world’s poorest people. Erasing the crushing debt load was among issues discussed by finance representatives at the meetings of the 184-nation World Bank and the International Monetary Fund. The concept won the endorsement of financial leaders from the world’s seven wealthiest countries – United States, Japan, Germany, France, Britain, Italy and Canada – who met Saturday in Washington.

Both the United States and Britain have offered competing plans, but officials have failed to settle differences, mainly over how to pay for debt relief.

Under the U.S. approach, the poorest countries would not have to repay loans to the World Bank, the IMF and the African Development Bank. The Bush administration also wants future aid to come in the form of grants, which do not have to be repaid, rather than loans.

“Our proposal not only drops the debt of yesterday, but prevents debt from burdening countries again well into the future,” Treasury Secretary John Snow said Sunday.

Critics say that deprives the lending institutions of money to compensate for loan repayments no longer required. Britain’s proposal would rely on a greater financial commitment to the World Bank and the IMF by rich nations.

Some outside advocates want the IMF to sell part of its massive gold reserves to pay for the debt relief. The United States does not favor that.

U.S. and British officials sought to play down their differences and said they were encouraged by developments over the weekend. A more pessimistic view came from groups demanding forgiveness of billions of dollars of debt for poor nations. Officials said their work this weekend would make a deal possible at a summit of world leaders in Scotland in July.