World economic policy makers say they have made progress on implementing a debt reduction program, but worry about the economic impact of higher oil prices. Ministers are attending a meeting of the International Monetary Fund in Washington
The finance ministers are concerned that the steady rise in oil prices could harm worldwide economic growth. They note that oil prices have doubled over the past 18 months and that this trend could be aggravated by the disruption of oil production in the United States due to back-to-back hurricanes. Kenya's finance minister David Mwiraria says higher priced oil hits poor people hardest.
Kenya, he says, has been especially hard hit because drought curtailed hydro-electric production and forced a switch to oil fueled power plants. "That, of course, becomes very expensive and makes electricity almost out of reach for many people. And makes goods produced in Kenya very expensive," he said.
On Friday, finance ministers from the richest countries moved to overcome obstacles that threatened implementation of the debt cancellation plan agreed to at an eight-nation (G-8) summit in Scotland last July. Zambia's finance minister, Ngendu Magande, praised the debt cancellation program, which has already reduced Zambia's foreign debt by 68-percent. "The savings I'll make from there (the 68-percent reduction), I'll apply them to education and I'll apply them to health. Beyond that, Zambia is one of 18 countries that perhaps will be beneficiaries of the G-8 (program). If that comes by July, Zambia's foreign debt is going to be reduced by about 98-percent," he said.
Aside from energy and debt, the IMF meetings are focused on global imbalances -- large trade surpluses in Asia and a large and still growing trade deficit in the United States. While many finance ministers are praising China's recent decision to allow a modest revaluation of its currency, others ministers say bolder action and a much larger revaluation are needed.