WASHINGTON – The 184-nation International Monetary Fund and the World Bank opened their annual meetings on Saturday ready to act on a breakthrough deal that would forgive more than $40 billion owed by the poorest nations.
"We in the World Bank (search) must be sure that we deliver results," said the bank's president, Paul Wolfowitz, at the opening session. "And by results, let me be clear. I mean results that have a real impact in the day-to-day lives of the poor. We stand accountable to them."
An agreement Friday among finance officials of the world's seven wealthiest industrial countries should clear the way for final approval by IMF (search) and World Bank leaders to the debt relief program, Treasury Secretary John Snow said.
The IMF's managing director, Rodrigo Rato, said the debt plan must get enough financial support from wealthy nations so it will not "cripple the fund's ability to provide support to low-income countries that need our help in the future."
The plan would erase more than $40 billion in debt owed by the world's 18 poorest nations — many of them in Africa — to the World Bank, the IMF and theAfrican Development Bank (search).
The outlines of the deal were settled on by President Bush and other world leaders at an economic summit meeting in Scotland, in July.
But Belgium, the Netherlands and others said the rich countries were not making sufficient commitments to replace the money that the IMF and World Bank would forego.
Finance officials from the Group of Seven (search) countries, joined by Russia's finance minister, pledged in a letter to Wolfowitz to "cover the full cost to offset dollar for dollar" the loan repayments the World Bank would lose.
Snow said he believed the agreement would help overcome objections to the debt relief plan, leading to approval by the executive boards of the IMF and World Bank.
"It would be our hope they can do that quickly within a week," Snow said.
The G-7 also addressed soaring energy prices. The countries said they were committed to a broad plan intended to increase supplies, promote conservation and improve the release of timely data on oil production as a way of reducing wild price swings in global energy markets.
France's finance minister, Thierry Breton, said he and Britain's chancellor of the exchequer, Gordon Brown, planned to tour oil-producing countries in the next month on behalf of the G-7 to urge them to improve the timeliness and quality of oil market data.
"Today there is not enough visibility between demand and supply and oil markets are not as open as others," Breton said.
The finance meetings got under way as Hurricane Rita (search) bore down on the Texas Gulf Coast soon after Katrina had caused widespread shutdowns of oil platforms and refineries along the Louisiana Gulf Coast.
Katrina sent gasoline prices in the United States above $3 per gallon and oil prices briefly above $70 per barrel. But crude oil prices posted a second straight day of declines on Friday as traders welcomed news that Rita was weakening before it hit land. Crude oil settled at $64.19 per barrel in New York trading, down $2.31.
Snow said he assured his G-7 colleagues that the billions of dollars in federal money that will be spent in hurricane recovery will not jeopardize President Bush's goal of cutting the federal budget deficit in half by 2009.
Meantime, finance officials praised China's move on July 21 to stop linking its currency directly to the dollar. China allowed its currency, the yuan (search), to rise in value by 2.1 percent against the dollar and announced a further change to its currency system on Friday.
Private economists said those changes still left the Chinese currency undervalued by as much as 40 percent against the dollar, giving China a huge competitive advantage and contributing to America's $162 billion trade deficit with China.
Finance officials from China, Russia, Brazil, India and South Africa attended a portion of Friday's G-7 discussions. Officials said talks were under way to see how the group could be expanded. Its members now are the U.S., Britain, Canada, France, Germany, Italy and Japan.