GAO-02-698T Developing Countries: Switching Some Multilateral Loans to Grants Would Lessen Poor Country Debt Burdens

I am pleased to be here today to discuss the impact that switching some loans to grants would have on poor countries debt burdens. In July 2001, President Bush proposed that the World Bank and other development banks replace 50 percent of future loans to the worlds poorest countries with grants. A goal of this proposal was to relieve poor countries long-term debt burdens. The presidents grants proposal would mean a significant change for multilateral institutions such as the World Bank, which traditionally use low-cost loans to deliver development assistance. The World Bank estimates that this controversial proposal would result in a financial loss of $100 billion over the next 40 years.