Rich Land, Poor Lands
AT a time when the budget deficit is again dominating headlines in the United States, how can America give $15 billion to international lending institutions? Shouldn't that money stay home, for domestic needs? Those are questions Congress will be grappling with in the months ahead as it considers new financial commitments made by the Bush administration to the International Monetary Fund (IMF) and to the International Development Association (IDA), an affiliate of the World Bank.
They are the wrong questions, however. Lawmakers should ask: How could the richest country in the world afford not to maintain its leading role in international assistance arrangements that foster growth, help lift world debt burdens, and ease the anguish of the 20 percent of the world's population that lives in dire poverty?
The larger US pledge was made this week at a meeting of the IMF, whose 152 members agreed to increase the organization's capital by 50 percent, or $60 billion. Washington's 20 percent share comes to $12 billion.
The IMF makes three-year to five-year loans to member countries to bridge balance-of-payments gaps and for economic development. The fund's loans often come with tight strings attached, including austerity programs in countries wracked by inflation and uncontrolled government spending. The conditions offend poorer borrowers, but they have levered governments out of dead-end, no-growth policies. The IMF also has played a constructive role in Brady Plan efforts to write off third-world debt. And the new funds will help economic transformation in Eastern Europe.
IMF contributions aren't a gift, but an investment in a freer, more prosperous international economic and trading order. IMF deserves continued US support.
So does the International Development Association. IDA exists to aid the world's poorest lands, those with annual per capita incomes below $580. Too poor to borrow in world markets, these countries - mainly in sub-Saharan Africa and Asia - receive 30 to 40-year, interest-free IDA loans for infrastructure projects and agriculture improvement.
Congress is holding hearings on the ninth IDA ``replenishment'' since its inception in 1960. The US tab would be $3.2 billion, or 21 percent of the $15 billion replenishment. (The US used to contribute 40 percent.)
One of the founders of IDA, the US has a humanitarian responsibility to maintain its leadership in helping the world's most needy. America's fiscal problems are not so great that it needs to turn its back on people who earn in a year what the average American earns in 12 days.