Africa/Global: Debt discord holds up progress

The initiative to write off debt owed by the world's poorest countries to the International Monetary Fund and World Bank has been held up by a dispute among rich nations on how much relief to grant. The arguments centre around the effect of lower global interest rates on the debt relief calculations used by the heavily indebted poor countries (HIPC) programme. They mean that the value of future debt payments in present value terms, discounted back to the present day using interest rates, are larger. Officials familiar with the situation say that some countries on the IMF and World Bank boards, including the UK, France and Canada, have argued that the amount of debt relief on offer by the bank and fund should take account of this. Others, who they say include the US, Japan and Germany, have disagreed. The US Treasury said it was concerned that countries would use increased debt relief as an excuse to borrow more from the bank. "We are concerned about the bank being in a position where it is in a continual cycle of lending and forgiving," said a US Treasury official.