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WASHINGTON, Dec 22 (Reuters): The International Monetary Fund's executive board yesterday agreed to write off $3.3 billion owed to it by 19 of the world's poorest countries but delayed forgiving Mauritania's debt.
"This is an historic moment, which will allow these countries to increase spending in priority areas to reduce poverty, promote growth," IMF Managing Director Rodrigo Rato said after the two-hour board meeting.
Development activists welcomed the debt relief and said they were pleased the deal, struck by the Group of Eight rich nations in July with much fanfare, was not narrowed by the IMF board as drastically as some had feared.
An internal IMF staff memo, dated Dec 8 and obtained by Reuters this week, had recommended the board delay debt relief to six nations-Ethiopia, Madagascar, Mauritania, Nicaragua, Rwanda and Senegal-until macroeconomic and government accounting problems were addressed.
A group of Capitol Hill lawmakers wrote to the IMF and US Treasury urging full debt cancellation "without further delays or conditions," and aid activists staged a rally outside the lender of last resort's Washington headquarters this week.
Ultimately, IMF directors agreed in what fund spokesman Thomas Dawson described as "a harmonious board meeting" to cancel the debts of 19 countries, effective early 2006.
Those approved for IMF debt relief are Benin, Bolivia, Burkina Faso, Cambodia, Ethiopia, Ghana, Guyana, Honduras, Madagascar, Mali, Mozambique, Nicaragua, Niger, Rwanda, Senegal, Tajikistan, Tanzania, Uganda and Zambia.
The one country deemed ineligible for immediate debt forgiveness, Mauritania, should be able to get the write-off in coming months, Dawson told reporters on a conference call.
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