Bush Recommends World Bank, IMF Provide Grants Instead of Loans to Poor Nations for Education, Health
President Bush yesterday called on the World Bank to provide a larger proportion of its financial assistance to developing nations through direct grants instead of loans for needs such as health care, the New York Times reports. Speaking at World Bank headquarters yesterday, Bush proposed that the bank provide up to 50% of its assistance to developing countries through grants, thus allowing the countries to "alleviate the debt that burdens" their economies (Bruni/Sanger, New York Times, 7/18). A number of lawmakers, AIDS groups and African groups have called on international lending institutions such as the World Bank and the International Monetary Fund to forgive the debts of developing nations, stating that debt reduction would help the countries allocate more funding toward HIV/AIDS and other health initiatives. In April, California Reps. Barbara Lee (D) and Maxine Waters (D) introduced a bill (HR 1567) calling for debt relief for nations in the IMF's Heavily Indebted Poor Countries Initiative (HIPC), as well as "any other country heavily affected by HIV/AIDS" ( Kaiser Daily HIV/AIDS Report, 4/26). Bush said yesterday that providing grants instead of loans would help developing countries more than debt relief, which he called a "short term fix." He added, "The proposal today doesn't merely drop the debt, it helps stop the debt" (Bush statement, 7/17). But the New York Times reports that Bush did not elaborate on whether the United States might pay for the "added cost" of shifting from loans to grants. The World Bank currently spends $6 billion annually on loans to developing nations, and the United States contributes $803 million to the bank each year. The bank has estimated that over the next decade the United States would need to double its contribution "just to maintain the current level of aid" (New York Times, 7/18). Jeff Lamb, director of resource mobilization for the World Bank, said that when the bank issues money without receiving payment, "donors -- or somebody -- either have to start making up all of those grants that we've been making or else the capacity of [the International Development Association] to help other poor countries just goes in the toilet." Grants currently account for less than 5% of the funds allocated by the World Bank to developing countries (Curl, Washington Times, 7/18). Meanwhile, World Bank President James Wolfensohn has placed a "different emphasis" on aid to developing nations, stating that free trade, not debt relief, is the "most important step" developed nations can take to aid poorer countries (New York Times, 7/18).
At the meeting yesterday, Bush also reiterated his support for the Global AIDS and Health Fund proposed by U.N. Secretary-General Kofi Annan, saying that he plans to advocate the fund during the upcoming G8 summit in Genoa, Italy. "[T]he Genoa summit will formally launch a new global fund to combat HIV/AIDS, malaria and tuberculosis. The United States ... [is] proud to have been a leader in developing the fund's structure and its focus on prevention with a broad strategy that includes treatment and care." The United States has pledged $200 million toward the fund, but Bush said that he is "ready" to contribute more "when it demonstrates success." Bush added that he is "proud" that the United States allocates nearly $1 billion each year toward international efforts to fight HIV/AIDS and other diseases and "remind[ed]" meeting participants that this amount is "twice the amount of the second largest donor." Bush also said yesterday that Secretary of State Colin Powell and Andrew Natsios of the U.S. Agency for International Development will develop an initiative to "improve basic education and teacher training in Africa, where some countries are expected to lose 10% or more of their teachers to AIDS in the next five years" (Bush statement, 7/17).