Switzerland welcomes new IMF debt relief plan

Swiss Finance Minister Kaspar Villiger (right) welcomed an International Monetary Fund initiative to provide millions of dollars in debt relief for some of the world’s poorest nations.

Swiss Finance Minister Kaspar Villiger (right) welcomed an International Monetary Fund initiative to provide millions of dollars in debt relief for some of the world’s poorest nations.
IMF and World Bank officials — meeting at their annual conference in Washington — pledged to support “deeper, broader and faster debt relief” for some of the world’s most debt-burdened nations.

The new coordinated effort will provide debt relief to 36 nations and aims to erase up to $100 billion in debt, allowing the countries affected to commit scarce resources to poverty alleviation, health and education programmes.

Villiger — who attends the Washington meeting with Swiss National Bank President Hans Meyer (left) — said the agreement came after a number of the most industrialised nations in the world pledged more money to fund the programme.

Switzerland’s contribution would probably amount to $51.3 million, Villiger said, describing the new financing arrangements as “fair.”

British Chancellor of the Exchequer Gordon Brown, the chairman of the IMF’s policy setting Interim Committee, said the group had approved a recommendation to revalue 14 million ounces of the IMF’s gold reserves to market prices to support the debt effort.

The gold will be sold in off-market sales because the IMF was forced to drop plans to sell it on the open markets because of strong opposition from the mining industry, which feared the sales would further depress world gold prices.

In a further effort to bolster market prices, central bank officials from 15 European nations issued a joint pledge Sunday agreeing to limit their own future gold sales to levels already announced.

On the reform front, the IMF approved adoption of a new code of good practices the agency will use to monitor countries’ efforts to provide markets with accurate and timely information on key economic statistics such as their financial reserves – an initiative widely supported by Switzerland.

IMF policy-makers also promised to accelerate work on other reform proposals. Among those are proposals pushed by the United States for the IMF to tighten audit controls over its multibillion dollar loan programs.

The latest reform pledges came after months of criticism of the world institutions.

During the financial crisis of the past 2 ½ years, member governments criticised the bank and the IMF for stepping on each other’s toes as they put together billion dollar rescue packages in Asia, Russia and Brazil.

The World Bank and the IMF, known as the Bretton Woods institutions, were founded after World War II to manage the global economy.

From staff and wire reports.