The head of the World Bank said on Friday the Bush administration had discussed with him a plan to cancel poor countries' debt to global institutions, but said it hadn't revealed to him how this would be financed. James Wolfensohn has pushed debt relief for poor countries since taking the reins at the global development lender in 1995. Still, he expressed concerns the Bush plan could bankrupt a bank programme that provides interest-free loans and grants to impoverished nations.
Group of Seven officials, who requested anonymity, confirmed the plan was being pushed by US Treasury's international point-man John Taylor in closed-door talks.
However, they said the United States was unlikely to go public with it until after the US presidential election in November.
The US plan would affect about 33 of the world's poorest nations, 27 of which have already qualified for debt relief under a 1996 World Bank and International Monetary Fund scheme that expires in December.
The topic is timely as finance ministers from the G7 rich nations meet in Washington next week before the IMF-World Bank annual fall meetings.
"I am not against debt relief ... but you have to think how you replenish the revolving fund, which is to get shareholders to put in more money, and the second is how far do you take it," Wolfensohn told a press briefing ahead of the meetings.
British Chancellor of the Exchequer Gordon Brown, who also chairs the IMF's top policy-setting group, has long proposed a revaluing of the IMF's gold reserves as a way of releasing more money to cancel debts the world's poorest countries owe the World Bank and IMF.
Most IMF gold is valued at $40 an ounce - about one-tenth of current market prices - under a 1971 agreement although some was revalued at market prices in 1999 to finance HIPC, the debt-relief initiative.
The IMF holds 103.4 million ounces of gold, one of the biggest gold stocks in the world, which is valued on its balance sheet at $ 8.5 billion.
Global development group Oxfam said next week's Group of Seven meeting was an opportunity to push for a revaluation of IMF gold stocks, which would raise around $ 32 billion.
In a press briefing this week Treasury's Under Secretary John Taylor did not mention the plan, but said President George W. Bush had been pushing for more grants instead of loans.
US Democratic presidential hopeful John Kerry has also weighed in on the debt-relief issue, which has garnered increasing attention as HIPC's expiry approaches.
"As president I will lead the international community to cancel the debt of the most vulnerable nations in return for them living up to goals of social and economic programs," Kerry said on Friday as he campaigned in Philadelphia.
DATA, a group formed by rock star Bono that is pushing for wide debt relief for Africa, welcomed Kerry's support for debt cancellation and urged the Bush administration to make public its debt cancellation plan.
"President Bush should make this deal happen now by stating personally and publicly that 100 percent cancellation is the policy of the US government, in time to reach an agreement at the World Bank/IMF meetings next week," it said.
It noted that Britain and Canada, two other G7 nations, have been publicly supportive of further debt relief and said "there is every reason to believe agreement is possible if the Bush administration commits publicly."