G-7 Finance Ministers Agree That Poorest Countries Will Receive World Bank Funds for HIV/AIDS Programs as Grants

Finance ministers representing member nations of the Group of Seven this weekend agreed to increase the proportion of World Bank assistance for developing countries provided through grants rather than loans, the Washington Post reports (Blustein, Washington Post, 6/14). President Bush last July called on the World Bank to provide up to 50% of its financial assistance to developing nations for needs such as health care and HIV/AIDS efforts through direct grants instead of loans. European nations opposed the proposal, stating that it would deplete the World Bank's resources if developed nations did not significantly increase their foreign aid contributions (Kaiser Daily HIV/AIDS Report, 4/22). Under the agreement reached this weekend at a meeting called to "lay groundwork" for the G-7 meeting scheduled to be held in Alberta, Canada, later this month, the World Bank's International Development Association will provide 18% to 21% of its aid in the form of grants. Countries with per capita incomes of less than $1 a day would be eligible to receive 100% of their funds aimed at HIV/AIDS prevention and treatment projects as grants and "slightly lower" percentages for other health and "social sector" projects. Other projects, such as infrastructure, would only be eligible for funding through loans (Washington Post, 6/14).

Reaching Compromise
The compromise was less than American delegates had pushed for and more than European officials had sought. However, John Taylor, undersecretary of the U.S. Treasury for international affairs, said the deal is a "compromise which everyone can view as a win" (Wall Street Journal, 6/14). The deal, which must now be approved by all 183 World Bank member nations, also "removes a major obstacle" to a plan to increase IDA funding over the next three years, the Post reports. G-7 nations have been considering a plan in which they would contribute $12.5 billion to the IDA for the three-year period beginning July 1, a 16% increase over the amount of funding provided for the last three years (Washington Post, 6/14).