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Politics : Dutch Central Bank Sale Announcement Imminent? -- Ignore unavailable to you. Want to Upgrade?

To: Bill Murphy who wrote (6253)	6/12/1999 2:01:00 PM
From: bob k	Read Replies (1) \| Respond to of 81101

Bill, Here we go again! G7 agree on easing debt of world's poorest countries FRANKFURT, June 12 (AFP) - Group of Seven (G7) finance ministers reached agreement here Saturday on a plan to ease the debt of the world's poorest countries, including the sale of some 300 tonnes of IMF gold. Ministers gave few details on the debt agreement after a one-day G7 meeting here, because the proposal is due to be announced at the three-day G8 summit (the G7 plus Russia) beginning in Cologne on Thursday. But Japan welcomed the fact that the deal addressed the problem of "burden-sharing" among the lender countries. Japan and France had been concerned that, as the countries which had been most generous in the past, they would also bear the brunt of the cost of any debt relief package if it were implemented on the basis of a simple debt reduction. German Finance Minister Hans Eichel also told a news conference that the G7 members had finally agreed to sell about 10 percent of the International Monetary Fund's gold reserves to help fund the Highly Indebted Poor Countries (HIPC) debt relief initiative. The news was likely to further depress the gold market, already in decline since Britain announced last month its intention to sell 415 tonnes of gold, more than half its reserves, over three or four years. The industrial countries have been under increasing pressure to widen and speed debt relief efforts since in the two and a half years since the HIPC programme was launched only two countries, Uganda and Bolivia, have actually seen a reduction in their external debt. The world's 41 poorest countries have debts totalling more than 200 billion dollars. "There will be a very limited amount of (IMF) gold sales, 10 million ounces," German Finance Minister Hans Eichel told a news conference after a one-day G7 meeting here. The proceeds would be entirely for the HIPC programme, and "there will be no gold sales to finance Kosovo," Eichel said. Several industrial countries, including Britain, the United States and Japan, had already endorsed the sale of as much as 10 million ounces (nearly 300 tonnes) of the IMF's gold reserves to help meet the cost of the HIPC initiative. But Germany had fiercely opposed the plan until a new government took power late last year and hinted it might be willing to consider a gold sale. The gold sale would fetch about 2.6 billion dollars at current prices, but there is no guarantee the price will not fall further on prospects of a new gold selloff. Gold prices have been in decline since Britain announced last month its intention to sell 415 tonnes of gold, more than half its reserves, over three or four years and on Wednesday slumped to 259.25 dollars an ounce, their lowest level since May 1979. The G7 had been struggling to reach agreement on a debt relief package in time for the G8 summit, largely because of French and Japanese concern over how the cost of the package would be shared out. Japan said in a statement on the debt deal Saturday that it "welcomes, from the viewpoint of ensuring fair burden-sharing among donor countries" a British decision this week to add 100 million dollars to its contribution to the HIPC trust fund. "We are looking forward to similar positive actions followed by other donor countries," the Japanese statement said. It also stressed that Japan and France had been the largest grant donors to the HIPC countries among G7 members in the past five years. A European delegation source said on the sidelines of the G7 meeting that the G7 members had worked on a deal where the most generous bilateral donors would bear less of the cost of easing multilateral debt.