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IMF: Bush's Foreign Aid  Proposal Has Support - 2002-03-29

A spokesman for the International Monetary Fund said in Washington Thursday his organization supports a Bush administration proposal to provide aid to countries if they meet U.S. requirements.

President Bush told a U.N. development conference in Monterrey, Mexico recently that developing countries will have to make economic and political reforms before they can receive more U.S. aid.

According to IMF spokesman Tom Dawson, the proposal has support. "It is certainly an approach with which we are comfortable, and, I think, it has a broad degree of support in the international community," he said.

Mr. Dawson cited Britain as an example of a nation that also approves of giving aid to countries whose policies are likely to boost living standards.

But for American University economics professor Kevin Carey, another aspect of President Bush's proposal could draw criticism. "I think the concern is that at the same time that President Bush is talking about increasing aid, he also wants to see loans to developing countries replaced by grants," he said. "And particularly in Europe there is a concern that grants would be a less sustainable source of funding than loans."

Mr. Carey notes Europeans believe that, because loans must be repaid, developing countries will have a better incentive to use their aid wisely.

He says the IMF tends to share Europe's view. "They view their core competency as giving loans for macro-economic reform, so I don't think they're going to want grants to come onto their agenda anytime soon," he added.

IMF spokesman Tom Dawson did not comment on the grant portion of President Bush's proposal.