Sen. Phil Gramm, chairman of the Senate Committee on Banking, Housing and Urban Affairs, made the following statement today at a hearing on multilateral development institutions, such as the World Bank and other regional development banks.

The hearing, held by the Subcommittee on International Trade and Finance and chaired by subcommittee vice chairman Sen. Mike Crapo, R-Idaho, featured testimony from members of the International Financial Institution Advisory Commission, which recently recommended reforms at the World Bank and the International Monetary Fund.

"I want to thank Dr. Alan Meltzer and every member of the International Financial Institution Advisory Commission for beginning a very important debate. Part of our problem in this job is that we have a lot of things that are happening in many different areas. Almost all of them are closer to home than the World Bank and the IMF. Beneficiaries of the World Bank and the IMF do not vote in my elections.

"But these are important areas that represent at least an effort to fulfill America's mandate to carry freedom and economic opportunity to everybody in the world. I think the commission's report and the debate it has generated has benefitted us all by bringing these issues to the forefront.

"We are here today to look at the World Bank and the development banks, but I do want to say a couple of things about the International Monetary Fund. As many of you will remember, we worked out an agreement with the administration at the end of the last session of Congress to allow a partial revaluation of the IMF's gold reserves as part of a debt-relief effort. We did it only partially to give us an opportunity to look at how it was going.

"We have the potential this summer to go ahead and release the rest of the proceeds from that gold revaluation and also to exert world leadership by having the United States unilaterally forgive uncollectible debt. I had hoped that we would have the opportunity to consider and pass such a bill. I would have to say that, up to this point, we have not been successful in negotiating with the administration.

"Their view has been that debt relief is too important to deal with in the context of reform. My response has been a combination of A) it is too important not to consider in the context of reform and B) if it is not important enough to consider in the context of reform, then it is not important enough to do.

"I don't have any belief that we're going to change dramatically the IMF through this bill. But I do think that focusing the IMF on short-term lending and instituting some of the changes that have not been as controversial as others is a movement in the right direction.

"Also, I would say that the people in Texas who I work for are understanding people. They pay their bills, and nobody forgives their debt. But I think they want to know, if we're going to forgive debt, that we've put in place a system in which progress can be made and benefits can be gained from debt forgiveness. My constituents want to know that the benefit of the debt forgiveness, that is lifting the cost of servicing the debt, will go into areas that will promote economic growth and jobs.

"We are at an impasse with the administration. We're certainly willing to continue to work with them, but the bottom line is that we're about to have an election, and we're going to have a new president. If we can work out a reasonable agreement, we'll do it with this administration. But if we can't, we'll wait for the next administration.

"I am willing to compromise, but only if we're going in the right direction. I hope the administration will yet come to an agreement with us and let us pass this bill. I would like to pass this bill on debt forgiveness. I think it's an important thing for the United States to do, and it would give us the moral high ground in this whole debate."