Britain, France and Germany are calling for a freeze on foreign debt payments by the Asian nations hardest hit by last week's tsunami. The proposal would postpone $3 billion a year in debt payments, allowing the stricken countries to focus on reconstruction.
With the death toll still rising, leaders from Britain, France and Germany are pushing a plan to offer a debt moratorium for the Asian countries devastated by the December 26 tsunami. Three billion dollars a year would be made available for use in rebuilding the region.
Tony Fratto, a spokesperson for the United States Treasury Department, says while it is too early to talk about specific details, the U.S. government is consulting European allies on the debt relief proposal.
"The entire government is looking for ways that we can be of assistance to the victims of the tsunami,” said Mr. Fratto. “And that's taken various forms, including assistance from the international lending institutions, like the World Bank and the Asian Development Bank, and of course direct assistance from USAID and other humanitarian assistance from the U.S. government, and debt relief as well."
The U.S. government has so far pledged $350 million for tsunami relief efforts and American citizens have donated an additional $163 million to private charities and humanitarian relief organizations.
Treasury spokesperson Tony Fratto says the United States will discuss further aid efforts at Thursday's Tsunami Summit in Jakarta. Debt relief is also on the agenda at next week's meeting of creditor nations known as the Paris Club.
"We are having discussions with our counterparts in the G7 and other members of the Paris Club, but those are early discussions,” he added. “We haven't gotten into the details yet as to how we would address those issues in order to help these governments. So it's a little premature to say what exactly we would do but we are looking for opportunities to be helpful to those governments."
Analysts estimate the economic cost of the tsunami disaster could exceed $14 billion.
Neil Watkins, co-coordinator of the Jubilee USA Network, an organization dedicated to debt relief for the world's poorest countries, says given the magnitude of the damage and the large swath of countries affected by last week's tsunami, more must be done.
"We're encouraged by news from some European leaders and what we understand the U.S. government to be considering, which is a debt moratorium for payments from these countries to creditors,” he said. “We think that's a critical first step. But this must lead into actual full debt cancellation for countries in the region. We must go beyond simply stopping the payments towards actually removing, what are in many cases, illegitimate and unpayable debts for these nations."
Separately, the International Monetary Fund issued a statement Monday outlining different ways in which the Fund can help the countries affected. Among the options are emergency lending and technical assistance to help the affected countries assess the economic consequences of the disaster.