FINANCE MINISTRY ON IDA REPLENISHMENT; GOI

UNCLAS ROME 000563 SIPDIS SENSITIVE DEPT FOR EB/OMA E.O. 12958: N/A TAGS: EAID EFIN IT IDA SUBJECT: FINANCE MINISTRY ON IDA REPLENISHMENT; GOI ATTENDANCE AT DEVELOPMENT CONFERENCE UNCLASSIFIED PAGE 02 ROME 00563 051714Z REF: JANUARY 17 EMAIL FROM TFERET TO EU POSTS ¶1. ITALIAN OFFICIALS SUPPORT AN INCREASE IN IDA LENDING AS GRANTS RATHER THAN LOANS, BUT STILL ONLY AS MINOR SHARE OF OVERALL LENDING. IN A FEBRUARY 4 MEETING WITH FINMIN OFFICIALS, ECOUN AND ECONOFF PRESENTED PRESIDENT BUSH'S PROPOSAL THAT THE WORLD BANK AND OTHER DEVELOPMENT BANKS DRAMATICALLY INCREASE THE SHARE OF FUNDING PROVIDED TO THE WORLD'S POOREST COUNTRIES AS GRANTS RATHER THAN LOANS. ¶2. RAFFAELA DI MARO AND GIORGIO LECCESI, OFFICER DIRECTOR FOR BILATERAL ASSISTANCE AND OFFICE DIRECTOR FOR MDBS, RESPECTIVELY, AT THE FINANCE MINISTRY TOLD ECOUN AND ECONOFF THAT ITALY CONCURS WITH THE US THAT GRANTS ARE USEFUL MECHANISMS AND THAT THEIR SHARE OF OVERALL DEVELOPMENT ASSISTANCE FUNDING SHOULD BE INCREASED. ITALY DOES NOT, HOWEVER, SUPPORT A GRANT INCREASE GREATER THAN TEN PERCENT OF OVERALL IDA FUNDING. FOR REPLENISHMENT OF THE AFRICAN DEVELOPMENT BANK, ITALY SUPPORTS A GRANT CEILING OF 7.5 PERCENT. ITALY WOULD SUPPORT THE USE OF GRANTS FOR EDUCATION, HEALTH AND NUTRITION PROGRAMS. DI MARO UNDERSCORED ITALIAN CONCERN ABOUT THE COST TO DONORS, IN TERMS OF FOREGONE IDA REPAYMENTS, IF THE GRANT PORTION WERE INCREASED DRAMATICALLY. ¶3. WE ALSO DISCUSSED THE UPCOMING MONTEREY CONFERENCE ON INTERNATIONAL FINANCING OF DEVELOPMENT, PAKISTAN AND ZIMBABWE (THE LATTER TWO TO BE REPORTED SEPTEL). DI MARO POSTULATED THAT PM BERLUSCONI, IN HIS DUAL CAPACITY AS FOREIGN MINISTER, WOULD GO TO THE MONTERREY CONFERENCE. WE REPLIED THAT NO DECISION HAS YET BEEN MADE ABOUT US PARTICIPANTS. SEMBLER UNCLASSIFIED PAGE 03 ROME 00563 051714Z UNCLASSIFIED > 2002ROME00563 - Classification: UNCLASSIFIED