Advertisement
YOU ARE HERE: LAT HomeCollectionsThird World

U.S. May Cancel Up to $1 Billion of African Debt

June 30, 1989|ART PINE | Times Staff Writer

WASHINGTON — The Bush Administration is considering canceling as much as $1 billion in debt owed to the United States by poor sub-Saharan African countries as part of a package to be unveiled during the annual seven-nation economic summit in Paris on July 15 and 16.

The plan, still under discussion within the Administration and with congressional leaders, would affect the debt that these countries owe under various U.S. foreign aid programs. Washington either would forgive the debts entirely or allow the countries to repay in local currencies.

U.S. officials said the ultimate size of total debt forgiveness would depend largely on the formula that the White House works out with Congress on how to count the writeoffs in the federal budget. Strategists for President Bush want an advance agreement to avert any misunderstanding.

However, Administration planners said the proposal could provide as much as $1 billion in total debt reduction from the $4.5 billion that these countries owe the United States. The bulk of Africa's debt is owed to governments rather than to commercial banks.

The move is designed partly to blunt pressure from the French for the summit countries to provide increased debt relief on a wider front, possibly even to alter the broad Third World debt strategy unveiled earlier this year by U.S. Treasury Secretary Nicholas F. Brady.

Invitation to Paris

France took a similar step on its own early this year, and French President Francois Mitterrand has invited leaders of 30 debtor countries to a dinner in Paris on the eve of the economic summit. The conference is intended only for leaders of the seven major industrial democracies: Britain, Canada, France, Italy, Japan, the United States and West Germany.

Mitterrand has also proposed creating new lines of credit through the International Monetary Fund to help Latin debtors, but the United States and other major industrial countries are opposed. Most analysts are dismissing the French plan as a political gesture.

France often makes such gestures for Third World countries. Paris still maintains close commercial ties with many of its former West African colonies, which still sell raw materials and purchase industrial goods that are made in France.

Advertisement
Los Angeles Times Articles
|
|
|