|FOR IMMEDIATE RELEASE:||CONTACT: CHRISTI HARLAN|
|Thursday, April 27, 2000||202-224-0894|
Sen. Phil Gramm, chairman of the Senate Committee on Banking, Housing and Urban Affairs, made the following comments today at a hearing of the Subcommittee on International Trade and Finance about the International Monetary Fund:
"I am persuaded that the rational policy for the United States is to mark to market and write off loans to countries that have no hope of paying the loans back. That's a hard sell to somebody in my state who drives a pickup truck 50 miles to work every day. They borrow money; they have to pay it back.
"You have countries that borrowed money, often to implement programs that have been rejected all over the world. I'm willing to write off those loans, but I'm not going to do that unless we get some fairly substantial reforms.
"I think America ought to take a principled position of leadership. I think we ought to write off our loans. If we want to preach to the world, there's no sermon you can give that's better than the sermon based on what you've done. So I'm willing to take that step. And I'm willing to provide the other 5/14ths of the proceeds from the revaluation of the IMF's gold.
"But I can't see doing either without some fairly substantial reforms. I see those moving in two directions: The first is in an area where it appears there is a real consensus, and that is focusing the IMF on short-term lending. I do believe it's correct to say that IMF is an agency that started out with a mandate, under the Bretton Woods accord, that they were supposed to make liquidity loans to try to keep fixed exchange rates fixed. And like all government agencies, national and international, when that was no longer their mission, they found a new mission.
"It seems to me that what the United States needs to be doing, as a very large contributor to the IMF, is defining the mission that we want them to perform. I think that mission is short-term liquidity lending.
"The second, which we spent hours and hours discussing at the end of the last session of Congress when we negotiated the first gold revaluation, deals with what we want these countries to do with the benefits of the debt forgiveness. We initially started far apart: the administration wanted classical social programs, and I wanted economic reforms.
"I think we worked out a reasonable compromise. Now, if we're going to provide the revaluation of this gold, we're going to want reforms that we expect countries to make in return for either being members of IMF or being beneficiaries of IMF assistance.
"I just want to urge the Treasury Department to meet with us and discuss these issues because these are the areas of difference that are going to determine whether we're going to have a bill.
"I think it would be a very good thing if we could put together a reform bill that would release the rest of the funds from the gold revaluation and if we could have the United States, unilaterally, based on principle, write off its own uncollectible debt. I think that would give us a very strong moral position in the world.
"All of that is contingent on the willingness of the administration to agree to reforms to assure that, once we have made this good-will gesture, the fruits of it aren't squandered."