Poor nations that commit to economic and political reforms will receive an extra $5 billion in aid, half of it as grants and not loans, President Bush said Thursday.

The grants would be doled out over a three-year period starting in the fiscal 2004 budget, and would be linked to progress by developing countries in reforming their economies, rooting out corruption and promoting human rights.

"To make progress, we must encourage nations and leaders to walk the hard road of political, legal and economic reform so all their people can benefit," said Bush, speaking at the Inter-American Development Bank.

The speech comes ahead of an International Conference on Financing Development that the president will attend next week in Monterrey, Mexico.

Bush was speaking a day after the World Bank put out a report that showed developing countries are more likely to rebound from the global economic slowdown faster than richer nations, but still are not likely to experience rapid reductions in overall poverty.

The offer is part of a multi-pronged policy to root out terrorism that has included a tireless military assault on Afghanistan where terrorists easily took up camp after years of fanaticism and corruption in government. Bush pointed out that the recently-routed Taliban regime used a soccer stadium in Kabul built with international aid for public executions.

"Poverty doesn't cause terrorism," Bush said. "Being poor doesn't make you a murderer. Most of the plotters of 9/11 were raised in comfort. Yet persistent poverty and oppression can lead to hopelessness and dispair. And when governments fail to meet the most basic needs of their people, these failed states can become havens for terror."

"We applaud the president for recognizing the need to develop policies that elevate the importance of overseas development assistance. However, we need to see more details," said Sid Balman, spokesman for InterAction, an alliance of non-governmental organizations. "We hope his commitment in principle sees the light of day when the final figures of the budget come out."

Popping up in yet another Washington corridor of power, U2 lead singer Bono sat to the president's left. Bush recognized Bono, who has been in town all week to push debt relief and AIDS policy, two of his priorities as a self-appointed goodwill ambassador.

"Dick Cheney walked into the Oval Office.  He said, '(North Carolina Sen.) Jesse Helms wants us to listen to Bono's ideas,'" Bush said.

The president also said the United States would increase to $500 million its contribution to a global AIDS fund, "as the fund gets organized, develops a strategy and shows success."

The Associated Press contributed to this report.