IDB Forgives Debt of 5 Nations

from The Guardian

By NESTOR IKEDA

Associated Press Writer

GUATEMALA CITY (AP) - The Inter-American Development Bank announced Friday it would forgive $4.4 billion in debt owed by five of the poorest countries in Latin America and the Caribbean.

The bank excused the foreign debts of Bolivia, Honduras, Nicaragua, Haiti and Guyana in an announcement ahead of its annual meeting, which starts Monday.

``This is a historic opportunity that will give these countries a fresh start,'' bank president Luis Alberto Moreno said.

Honduras shed $1.4 billion in debt, Bolivia $1 billion, Nicaragua $984 million and Guyana $467 million. The initiative is retroactive to Jan. 1, 2007.

Haiti, which is part of the International Monetary Fund's Heavily Indebted Poor Countries Initiative, will be able to get rid of $20 million of its debt by 2009, and after that it can shed the entire $525 million.

Under the deal, the IDB will forgive some $3.4 billion in principal payments and $1 billion in interest.

Moreno said in a statement that the agreement was backed by ``all our members,'' in an apparent attempt to quiet suggestions that some Latin American countries, including Brazil, Argentina and Mexico, had resisted the move.

Moreno said the bank would also provide funding to Ecuador, El Salvador, Guatemala, Paraguay and Suriname to let those countries free resources for education, health care and other services.

Also Friday, civil organizations called on the IDB to abandon what they called ``failed policies'' such as the privatization of water utilities.

``In much of Latin America the water and sanitation systems are in desperate need of basic maintenance, rehabilitation, and expansion'', said Wenonah Hauter, director of Washington-based Food & Water Watch.

Meanwhile Amazon Watch, also based in Washington, urged the IDB to halt financing for a pipeline in Peru, which it said would harm that country's rain forest.