Germany and Britain Object to Bush’s Proposal to Increase World Bank Grants to Developing Nations

German and British officials, whose countries rank second and third after the United States as contributors to the World Bank's International Development Association, said on Wednesday that they oppose President Bush's proposal that the World Bank increase up to 50% its grants to developing nations, the Washington Times reports (Curl, Washington Times, 7/19). A number of lawmakers, AIDS groups and African groups have called on international lending institutions such as the World Bank and the International Monetary Fund to forgive the debts of developing nations, stating that debt reduction would help the countries allocate more funding toward HIV/AIDS and other health initiatives (Kaiser Daily HIV/AIDS Report, 7/18). But British Department for International Development spokesperson Beverly Warmington said, "The World Bank is actually a bank and there are development agencies to give grants. It's important that the World Bank work alongside them instead of compete with them." She noted that Austria, Denmark, Finland and the Netherlands also are "strongly opposed" to increasing grants instead of loans. Michael Hofmann, director general for Germany's Ministry of Economic Cooperation and Development, added that without pledging additional U.S. financing to the bank, Bush's statement is inadequate. "If we would have such a high amount of grants involved, that would mean that all of us would have proportionally to increase our contributions. If it doesn't increase the liability of donor countries, where should the money come from?" Hofmann said. Bush spokesperson Ari Fleischer said that the president is not seeking additional U.S. funds from Congress. White House officials said that the president's proposal would not cost donor nations any more money for the first 10 years, but as loans to developing countries already have a 10-year grace period for repayment, the "real cost" of Bush's plan "would come well after he is out of office," the Times reports. The World Bank currently lends $6 billion per year to developing nations through the IDA, with less than 5% of those funds going to grants for developing countries. Bush wants to increase the grant amount to $3 billion annually. After Bush announced the plan in a speech at World Bank headquarters on Tuesday, bank officials said that donor countries, particularly G8 nations, would have to "dramatically increase their contributions to the IDA" to fund a "capital increase" for the association. Currently, the United States contributes $803 million to the IDA, while Germany provides $423 million and Britain $281 million (Curl, Washington Times, 7/19).