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Generosity to tsunami-hit countries has fine print
Loans from FIs for some projects can be examined: Patil

Tokyo, January 11
The billions of dollars promised by world leaders after Asia’s devastating tsunamis may seem like unparalleled generosity, but recipient countries should beware there is also fine print.

As governments race to top one another by offering the biggest package, much of the "aid" will arrive in the form of loans that will need to be paid back, contracts for donor countries' companies or, many fear, will not come at all.

"I see no good reason to give loans. They’re poor, we’re rich, they need the money and I don't see why we need to ask for it back over the next 10 or 20 years,” said David Roodman, a research fellow at the Center for Global Development in Washington. “It serves to inflate the amount that's being given,” he said.

Ahead of today’s tsunami aid conference in Geneva, Australia has climbed to number one on the donors list by announcing the biggest pledge in its history: one billion dollars, equivalent to 762 million US. However, Australia would slip to second or third place, if taken into account that half of its pledge is in interest-free loans to Indonesia.

Conspicuously, Australia is the only major country to go on record opposing any moratorium on debt repayments by tsunami-hit countries, let alone debt forgiveness.
”Indonesia already owes Australia a billion dollars in debt. Is increasing that amount by half going to benefit the Indonesian people?” said Tim O’Connor of the Australian watchdog Aid Watch, according to this AFP report.

AP/PTI adds from Manila: Japan pledged an additional US $ 20 million today for tsunami disaster relief through the use of the nation’s trust funds at the Asian Development Bank.

In a speech at ADB headquarters in Manila, Japanese Finance Minister Sadakazu Tanigaki also encouraged lenders to offer a moratorium on debt owed by those nations hit by the December 26 earthquake and tsunami. ”I would like to announce that Japan has decided to provide an additional US $ 20 million through the Japanese trust funds at the ADB for supporting relief measures in the devastated areas,” he said.

”Japan will call on other countries to jointly apply (a) moratorium on public debt services for a certain period of time, when any disaster-stricken country so wishes,” he added. He noted that Tokyo had already pledged up to US $ 500 million in emergency grants, making Japan one of the largest donors.
The Group of Seven of the world’s leading industrialised nations is scheduled to discuss a proposal for a debt repayment freeze at a meeting tomorrow of the Paris Club of creditor nations.

"The government has the estimate of the total funds required for relief and reconstruction of tsunami-hit areas, which it can meet on its own,” he said, adding India had enough confidence and economic strength to deal with such disasters on its own.

”We are grateful to countries which offered help, but that does not mean that even if we do not need help, we still take it,” Patil said in an interview to Karan Thapar’s “Tonight at 10” programme telecast on CNBC last night. He went on to say that India was helping “not only ourselves but also our neighbours”, and observed that help from other countries could be taken if needed.

The Home Minister, however, said the government could examine if institutions like the World Bank and the Asian Development Bank (ADB), of which India is a member, could provide funds, which could be returned over in 40 to 50 years. “For example, if we want to construct a big wall covering the entire coast of Tamil Nadu, it will require big money, for which returns will not be paid immediately. If institutions like the WB and the ADB are in a position to help, we will examine it,” he said. — AFP/PTI