NEWS - Clinton Widens Plan for Poor

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Subject: NEWS - Clinton Widens Plan for Poor Debtor Nations 

Clinton Widens Plan for Poor Debtor Nations 


             By DAVID E. SANGER

                 ASHINGTON -- President Clinton announced a major
expansion on
                 Wednesday in the American effort to forgive the debt of
the world's
                 poorest nations, saying those countries would not have
to repay
          billions of dollars borrowed from American aid agencies if
they could show
          the savings were being used for education and fighting
poverty. 

          Clinton's pledge to forgive 100 percent of debt of the world's
most indebted
          nations -- mostly in sub-Saharan Africa -- expands a previous
commitment
          by the United States in June to write off up to 90 percent of
the money they
          owe. But the process may take years, and it is contingent on
Congressional
          approval of a $1 billion debt-forgiveness program that Clinton
sent to Capitol
          Hill last week as an amendment to his budget. 

          The reality, Administration officials say, is that many of the
countries that
          will benefit from the program never had much hope repaying
more than a
          fraction of the $5.7 billion they currently owe the United
States Treasury. In
          fact, much of that debt has already been written down on the
Government's
          ledger books, reflecting estimates that the United States was
likely to
          recover only pennies on the dollar. 

          Thus, by the magic of Washington's budget rules, the $5.7
billion in debt
          can be wiped out with a Congressional expenditure of only $1
billion. 

          Still, it is far from clear that Congress will go along with
the move, especially
          as elections approach. Clinton made the announcement at the
annual
          meetings of the World Bank and the International Monetary Fund
here, just
          as the two financial institutions were putting the finishing
touches on a $50
          billion debt-reduction program that involves their own massive
lending to poor
          nations. Clinton's announcement, during a brief appearance in
a hotel
          ballroom where thousands of delegates from around the world
were
          gathered, seemed to take many by surprise. 

          "Today I am directing my Administration to make it possible to
forgive 100
          percent of the debt these countries owe to the United States,"
Clinton said,
          "when -- and this is quite important -- when needed to help
them finance
          basic human needs and when the money will be used to do so." 

          Later, speaking to reporters, Treasury Secretary Lawrence H.
Summers
          said that Clinton's move had "symbolic importance that goes
beyond its
          economic significance," especially in countries that are
choosing between
          paying off their international loans or building more schools
or hospitals. 

          Clinton's program would initially aid countries like Uganda
and Mozambique,
          which have gone the furthest in meeting requirements set in
1996 for debt
          relief. But ultimately it could help 34 more nations, from
Tanzania to Zambia
          and Ivory Coast to Nicaragua and Honduras to rogue nations
like Myanmar,
          if they are willing to meet the conditions. 

          Clinton did not extend his spirit of forgiveness, however, to
one country
          deeply indebted to and in trouble with the I.M.F.: Russia. 

          On Tuesday the head of the fund, Michel Camdessus, said that
"it would be
          the height of irresponsibility to turn our back on this great
nation; we will not
          do that." 

          He urged that all the allegations of misappropriation of funds
should be
          weighed against seven years of "real progress," and praised
Russia for
          continuing to develop a "modern market economy." Camdessus'
comments,
          and the absence of balancing words of warning to Russia,
infuriated some
          White House officials who felt it undermined their effort to
send a stern
          message to Moscow. 

          Clinton talked Wednesday about Russia only as an example that
the Fund
          must heed as it reviews "its procedures and controls to
strengthen the
          safeguards" on use of its money.