UK, FRANCE TO URGE DEBT RELIEF FOR POOREST LANDS
Britain, France and other European
nations will make a strong plea in high-level meetings today
for urgent debt relief for the very poorest countries, European
monetary sources said.
    The request will be put to the International Monetary
Fund's policy-making Interim Committee, which meets here as
part of semi-annual IMF and World Bank talks.
    But it is likely to run into opposition from the United
States, which regards debt relief, even for the world's poorest
nations in Sub-Saharan Africa, with distaste.
    "If all creditors agreed, (Britain and France) would be
prepared to consider below market interest rates " for the
countries, one source said.
    A senior U.S. Treasury official poured cold water on the
plan earlier this week, however. "We are not willing to enter
into arrangements that would forgive debt or provide
concessional interest rates," the official said.
    At the heart of the American objection is the fear that
once such a concession is made for the very poorest nations,
then sooner or later Latin debtors will be demanding similar
relief.
    African nations owe foreign creditors, most of them
governments, over 70 billion dlrs. Over 21 billion dlrs is debt
owed by poorest Sub-Saharan African nations.
    In addition to interest rate concessions, the sources said
European countries wanted repayment of these loans to be
stretched out for up to 20 years, with a substantial delay
before capital repayments start.
    The issue was inconclusively discussed in yesterday's
meetings of the major industrial nations -- the United States,
Japan, West Germany, Britain, France, Italy and Canada.
    It is already under consideration by the Paris Club of
western creditor nations, to which the United States belongs.
    "There are quite obviously differences about it," one source
said of the American attitude. "But it is perfectly clear that
(debt repayment) is an abiding problem for a small number of
the poorest countries."
    The plan would also involve the conversion of bilateral aid
to these countries into outright grants, a policy already
adopted by Paris and London.
REUTER^M
