SOUTH AFRICA ON U.S. VIEWS ON DEBT RELIEF

UNCLAS SECTION 01 OF 02 PRETORIA 001384

SIPDIS

SENSITIVE BUT UNCLASSIFIED

TREASURY FOR IAO/OAN/BEN CUSHMAN

E.O. 12958: N/A
TAGS: ECON EFIN EAID SF
SUBJECT: SOUTH AFRICA ON U.S. VIEWS ON DEBT RELIEF

REF: A. STATE 31823


B. PRETORIA 966

C. APRIL 5 AND 6 2005 E-MAILS FROM TREASURY/BEN
CUSHMAN AND PRETORIA/JOE RIPLEY


1. (SBU) Begin Summary. On April 5, Econoff met with Acting
Chief Director for International Economics Danel van Rensburg
at the South African National Treasury to discuss U.S. views
on debt relief and other development funding issues. Van
Rensburg said that South Africa was supportive of the general
effort to increase official development assistance, but
realized that the specific vehicles for doing so would
ultimately depend on decisions that donor countries had to
make. The National Treasury was actively engaged with the
U.K. on its proposal to create an International Financing
Facility, and sought to better understand how it would
function and the impact that it might have on international
financial institutions. Van Rensburg said that South Africa
was generally supportive of using IMF gold to pay off
developing country debt, as long as the process was well
managed. Van Rensburg will be traveling to the United States
along with Finance Minister Trevor Manuel to participate in
annual IMF and World Bank meetings in Washington April 16-17.
Manuel is scheduling bilateral meetings on April 15 and is
open to attending a roundtable hosted by Secretary Snow (Ref
C). End Summary.


2. (SBU) While the Embassy delivered talking points
discussing U.S. views on debt relief to Acting Chief Director
van Rensburg at the National Treasury and Chief Director for
Economic Development John Davies several weeks ago, a meeting
on the subject at the National Treasury could only be
arranged for April 5. (The Ambassador and Econ M-C delivered
U.S. views on debt relief to Chief Director Davies and other
Foreign Affairs officials during a March 2 discussion on the
G-8 Summit, as reported in Ref B.) Also attending the
meeting were Director for NEPAD and African Programs Kamilla
Gumede and Economists Marlon Gescoint and Christian Green.
Van Rensburg and Gumede said that South Africa was supportive
of the general effort to increase flows of official
development assistance, but realized that the specific
vehicles for doing so would ultimately depend on decisions
that donor countries had to make. The National Treasury
welcomed the International Financing Facility as an
innovative proposal and was engaged with the U.K. to better
understand how it would work. Whatever the plan, South
Africa wanted to assure greater flows of development
assistance to developing countries and supported any effort
to identify viable options. Van Rensburg said that South
Africa was generally supportive of using IMF gold to reduce
developing country debt, as long as the process was well
managed, i.e., through selective sales of gold reserves or
some revaluation buy-back scheme as before. South Africa was
waiting for the IMF paper on the subject promised for the
spring meeting of G-7 Finance Ministers.


3. (SBU) Gumede added that in considering new financing
mechanisms, the implications for existing international
financial institutions also needed to be considered. Gumede
said that the National Treasury agreed with the U.S. that
development policy should be based on thorough analysis, and
was appreciative of the work that the United States had done
in this regard. South Africa was supportive of the
conclusions reached by the International Development
Association and African Development Fund on debt
sustainability. South Africa agreed with the United States
that the balance of new international development financing
should be tipped toward grants rather than new lending.
Gumede commented that whatever transpired, it was South
Africa's hope that developed countries could agree on more
ambitious financing of official development assistance.


4. (SBU) Van Rensburg told Econoff that he would travel to
the United States with Finance Minister Trevor Manuel to
participate in annual IMF and World Bank meetings in
Washington April 16-17. Van Rensburg thought that Manuel
would be interested in attending a roundtable hosted by
Secretary Snow, but that the Minister's office would require

SIPDIS
some sort of formal invitation before Manuel could commit
(Ref C). Van Rensburg told us that Manuel would be departing
Pretoria on April 8 for Europe before flying onto Washington
and that he was scheduling bilateral meetings in Washington
on April 15. On April 6, Manuel's Personal Assistant
confirmed to us that, in anticipation of an invitation,
Manuel was open to attending a roundtable hosted by Secretary
Snow on April 15.
FRAZER