World Bank Aims to Wipe Out Nations' Debt

This is certainly good news. I applaud Paul Wolfowitz and the World Bank for this audacious gesture on behalf of ending absolute poverty in the Third World. Though I do have some degree of skepticism. A few months back when Wolfowitz took the job as World Bank president many pundits as well as myself assumed that there was some nefarious purpose in naming him in that role. I, for one, assumed that his position there would put him in a position to secure funds in a war effort against Iran. Now lord only knows if Wolfowitz will ever actually be able to take advantage of his power at the World Bank with respect to Iran. If we end up not going to war in Iran, my question is, can or will Wolfowitz be a worthy or effective World Bank administrator? This debt forgiveness plan certainly makes it seem like his heart is in the right place but again, who knows.

Here's the story:

The World Bank's board is expected to consider a plan next week for wiping out poor countries' debt, the lending institution's' president, Paul Wolfowitz, said Wednesday.

"It will be in their hands to decide early next week," he told reporters.

The plan would forgive nearly $40 billion worth of debt for 18 poor countries, most of them in Africa, over a 40-year period, he said.

Wolfowitz believed the World Bank would be able to start providing debt forgiveness to countries by the middle of next year.

The expected approval by the World Bank board would mostly be a formality. Financial leaders nailed down the landmark debt-foregiveness plan at meetings in late September of the 184-nation World Bank and International Monetary Fund.

A general framework for the deal was endorsed by leaders of the world's eight major industrial powers at an economic meeting in July in Scotland. The details of putting the deal in place were left largely to the World Bank and the IMF to settle.

By canceling debts owed to the World Bank, the IMF and the African Development Bank, poor countries could use the money for education or drugs to fight HIV/AIDS or malaria, supporters of debt forgiveness say.

A major breakthrough on the debt cancellation deal came in late September when finance officials from the world's richest countries agreed to put up all the money to cover the loan repayments lost when the debt are written off. Those commitments allayed concerns that the lending institutions would be financially impaired.