FILE PHOTO: SNOW
Pablo Martinez Monsivais  /  AP file
Treasury Secretary John Snow, in an appearance at the National Press Club earlier this month.
updated 9/30/2004 11:24:46 AM ET 2004-09-30T15:24:46

The Bush administration is pushing proposals to significantly expand debt relief to some of the world’s poorest countries, Treasury Secretary John Snow said Thursday.

The issue is expected to be high on the agenda at Friday’s meeting of finance officials from the world’s most industrialized countries.

“Grants and debt relief must be significantly increased — we are considering more options to do so, including those that would provide up to 100 percent debt relief and grants,” Snow said. He didn’t provide details.

Snow made his remarks in a speech to a group honoring the 20th anniversary of the Bretton Woods Committee, a nonprofit organization involved in increasing the understanding of international financial and development issues as well the role of the International Monetary Fund and World Bank.

23 nations getting relief through IMF
The IMF and World Bank run a program that provides some debt relief to poor countries. Twenty-seven countries have been approved for debt-reduction packages — 23 of those countries are in Africa. Uganda, Bolivia and Ethiopia are among the countries already getting debt relief.

“I am working with my colleagues in the G-7 ... to achieve a consensus on the best way to solve the debt sustainability problem and ensure that our reforms only result in greater, not fewer, resources to poor countries,” Snow said.

Finance ministers and central bank chiefs from the United States, Britain, Canada, France, Germany, Italy and Japan — the Group of Seven richest countries — meet Friday. The International Monetary Fund and the World Bank hold annual meetings over the weekend.

Snow was meeting later Thursday with top Chinese economic officials and China has been invited to meet with G-7 finance officials for the first time over dinner Friday night.

President Bush has been accused by Democratic presidential challenger John Kerry of failing to do enough to address America’s soaring trade deficit with China, blamed for the loss of thousands of American manufacturing jobs.

U.S. pressuring China on currency
In response, the administration has been increasing pressure on China to stop linking its currency to the value of the dollar, a practice that U.S. manufacturers contend has resulted in a yuan that is undervalued by as much as 40 percent, giving Chinese companies a tremendous competitive advantage over American firms.

Snow was expected to step up his lobbying efforts with the Chinese during the discussions in coming days. He gained a valuable ally in this effort Thursday with IMF Managing Director Rodrigo Rato saying he believed China’s economy would be helped by a more flexible exchange rate policy.

“Our position is clear. We think there is room to maneuver ... to move to a more flexible exchange rate,” Rato told reporters at a news conference. “Because this is a moment of strong growth in the Chinese economy, this is the time to do it.”

In his speech, Snow struck an optimistic note about the world’s economic health. “No major economy is in recession or facing high inflation,” he said. “I am optimistic that the positive track we are on will continue, but this is not the time to be complacent.”

Global economic growth seen strong
Despite surging oil prices, the global economy is expected to register its strongest growth in three decades, according to the IMF. After expanding by 3.9 percent in 2003, the global economy is now projected by the IMF to grow by 5 percent in 2004. That is a better forecast for this year than the 4.6 percent increase estimated in April.

Oil prices surpassed $50 a barrel earlier this week, but have since settled back a bit.

Snow didn’t discuss oil prices in this speech, but earlier in the week he raised concerns about surging oil prices and said that would be a topic of discussion at the finance meetings.

Police stepped up security for those weekend meetings amid continued threat of terrorist attacks against some financial institutions. Certain streets will be closed to all automobile traffic and some parking garages will be emptied of cars.

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