World Bank announces approval of Multilateral Debt Relief Initiative
24 April 2006
On April 21 World Bank president Paul Wolfowitz announced that the institution had secured enough votes to approve the Multilateral Debt Relief Initiative (MDRI) for 17 countries worth $37 billion over the next 40 years.
On April 21 World Bank president Paul Wolfowitz announced that the institution had secured enough votes to approve the Multilateral Debt Relief Initiative (MDRI). This initiative will theoretically erase the debt owed by some of the world's poorest countries to the low interest loan arm of the World Bank, the International Development Association (IDA).
There are 17 main countries which will be directly affected. These select countries from Africa and Latin America have "graduated" from the Heavily Indebted Poor Countries (HIPC) Initiative and are now considered eligible for debt relief. Wolfowitz said he gathered the necessary two thirds of the votes from the 184 country organization in order to pass the new initiative. Approximately $37 billion dollars will be allocated to this initiative over the next 40 years.
Critics of the World Bank and supporters of debt relief have welcomed the move but still remain skeptical. Some wonder if money will simply be diverted from other assistance programs into the debt relief initiative and thereby create gaps in other development lending programs. Others will likely be more satisfied when the financial commitments and pledges announced at the G-8 meeting in Gleneagles last summer are actually deposited into the initiative's account.