TREASURY'S MULFORD BACKS DEBT CONVERSIONS
Assistant Treasury Secretary David
Mulford said he prefers debt conversion plans to help heavily
indebted countries over quick-fix political plans to help ease
their debt burden.
    "In my view, debt conversions or swaps into either equity
or local debt claims provide a preferable route to 'debt
relief' for the debtor nations, particularly if combined with
measures to encourage new equity investment and the
repatriation of flight capital," he told the House Subcommittee
on International Development Institutions.
    Mulford criticized what he called large-scale solutions to
the debt problems effecting many developing countries, ranging
from debt forgiveness to creating new multilateral institutions
for lending.
    "While such approaches may have some political appeal, they
are impractical and ultimately counterproductive," he said.
    He said debt conversions, or swaps, are more effective
because they eliminate the interest service on converted debt,
create new jobs and open up investment opportunities that can
help indebted countries overcome their own problems.
 Reuter
