Letter: How to lift Third World's massive burden of debt

Click to follow
I AGREE with the IMF official in Richard Dowden's piece ('Inside this building the officials are deciding what's best for Africa', 28 March) on the World Bank/IMF's relations with Africa, that 'we should have been more dictatorial sooner'. I would add: 'both with African governments and with World Bank management.'

The 'North' today receives back dollars 80 of every dollars 100 advanced to Africa by the World Bank, either in the servicing of outstanding Bank debt on old project financings (50 per cent of which the Bank itself lists as 'unsatisfactory or failed'), or in payment for equipment or consultancy services from developed countries.

As the international bank of last resort, the IMF should buy in and place 'on ice' the World Bank's failed and questionable project debt principal for 20 years and, for truly accountable democratic borrowers, forgive the attendant annual servicing costs until the principal is amortised.

In this way, some dollars 20bn of debt principal could be written off by the 'North', at an annual 'cost' of some dollars 1bn, a massive burden lifted. This would force a greatly streamlined World Bank to be more accountable, while encouraging African governments to become more worthy of credit, under accountable leadership.

Karl A Ziegler

Centre for Accountability and Debt Relief, London SW1