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Debt Moratorium Proposed for Asian Countries Devastated by Tsunami

The world's richest nations are backing a debt moratorium that would freeze debt service payments for those countries devastated by the Indian Ocean tsunami. The proposal will free up some three billion dollars a year, which would be made available for use in rebuilding the region.

The G7 group of industrialized nations will work out the details of the debt moratorium at next week's meeting of the Paris Club.

U.S. Congressman Dan Burton, co-chairman of the Indonesian Caucus, tells VOA he supports the debt relief proposal. "If that means deferring action on debt that is owed to the United States or other countries I think that we ought to seriously consider that. And I think that we will. I think that (debt) can be deferred and I think it will help the people with the recovery efforts over there," he said.

The U.S. government has so far pledged $350 million for tsunami relief efforts. In addition, the United States has committed 13,000 military personnel to the effort, along with more than a dozen ships and hundreds of aircraft, including nearly 100 helicopters.

Meanwhile, The Chronicle of Philanthropy reports that American relief charities have raised more than $245 million, much of that in the form of on-line donations.

But with analysts placing the economic cost estimate of the tsunami disaster near $14 billion dollars, aid groups say much more is still needed.

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 governments should be talking about full debt cancellation. "We think that we need to see a debt moratorium, but we think we need to see even more. We need to see that debt moratorium not only applies to bilateral debts, or debts owed to our government or the British government or other governments, but also multilateral debts. Debts owed to the IMF, the World Bank and the Asian Development Bank, which is a huge percentage of the debts these countries are actually paying," he said.

The G7 is urging the World Bank, International Monetary Fund and Asian Development Bank to do what they can to provide emergency assistance to the tsunami nations.

Earlier this week, the International Monetary Fund issued a statement 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 - but not debt cancellation.