Brown's pledge to the poor is just a start

The chancellor, Gordon Brown, has demonstrated that the national commitment to forgiving the debt of the world's poorest countries is profound. At the spring meetings of the IMF/World Bank in Washington the chancellor was instrumental in raising the profile of the debt relief agenda: Britain was the first country to support a sale of 10m ounces of IMF gold; it backed the notion that the number of countries to qualify for debt relief in 2000 should be doubled to around 40 of the poorest nations and proposed lowering the hurdles to qualification for debt relief.

This was all fine as far as it went dealing with the unresolved question, until the Washington meetings, on how the IMF share of debt relief would be paid- for. But the expanded process, which was broadly endorsed in Washington (reflecting the changed position of the German, Italian and Japanese) left the question wide open.

This was of particular concern to the World Bank which operates the trust fund for debt relief and has largely funded its share and that of other multilaterals like the African Development Bank from its own income stream.

There were three possible ways of fulfilling the funding gap for an expanded debt forgiveness plan: to solicit more funds from donor countries; to raise the World Bank's charges to other customers, or to divert cash earmarked for anti-poverty programmes.

At the Downing Street announcement the UK made it clear which direction it wants to take when it committed a further $100m to the highly indebted poor countries trust fund. Britain will find this extra cash from Clare Short's growing international development budget.

This may seem a drop in the ocean when compared to the $50-$60bn the chancellor and other G7 governments are likely to aim for in Frankfurt this weekend and later on at heads of government meeting in Cologne on 18-20 June.

The British contribution will encourage other G7 governments, some of them with considerably larger gross domestic product, to make similar gestures, and will stimulate governments outside the G7, like those of the Nordic countries, to do the same.

Britain will also lobby for the EU to subscribe up to $1bn from its development fund - if it does not face heavy conflicting claims from Balkan renewal. Moreover, because the debt figure to be forgiven is in nominal terms, the actual number in the net present value terms used by economists will be considerably smaller.

The relief of debt by the World Bank, the IMF and other development banks unlocks a process under which the Paris Club can move to bilateral debt relief and commercial groups (which will never see their loans back anyway) can join in.

As the World Bank president, James Wolfensohn, has pointed out, just for giving debt in a vacuum, in much the same way as the emerging market countries were rescued, is a waste of time.

Hence his advocacy of a comprehensive development framework which looks at the political and social balance sheet too, to ensure that civil society exists (so the funds will not end up in Geneva), and that budgets are redirected to anti-poverty programmes rather than shiny new guns. The Labour government has made an important pledge. But it will not bring an instant end to the debt overhang.

Siege society


The Nationwide appears to have learnt a great deal from its past. At a time when the residential property market has started to boom away, on the back of low interest rates and some terrific mortgage deals, it has chosen - as a precautionary move - to raise its provisions by 45% to ?60.1m - against the possibility of future bad debt.

During the last downturn in the residential market, in the early 1990s, the then management of the Nationwide was forced to make some of the biggest provisions among housing lenders when the tide turned.

As matters stand Nationwide can afford to be cautious because of a sound performance. It still managed to deliver higher profits, 9.5% up at ?407.5m.

However, even though the Nationwide demonstrates clearly it is able to operate effectively as a mutual, it still faces outside attack. The latest threat is over the salary of chief executive, Brian Davis, although there must be a suspicion that the dissident member Alan Debenham has a broader agenda.

Hanging in the background is the idea, promoted partly by Richard Branson, that the Nationwide's charity funds should somehow be unlocked. Thus far Brian Davis has shown himself a more effective fighter against the conversion advocates than his colleague Chris Rodrigues at Bradford & Bingley.

The trick at Nationwide will be focusing on the business, including developing new streams of income, at a time when it unfairly remains under siege.

News blackout


The determination of Rupert and Anna Murdoch to keep the details of their divorce settlement confidential is in marked contrast with how his newspaper properties deal with other marriages. The outcome of what were reported to have been acrimonious negotiations are of critical public interest. The parties say that the Murdoch family interest and the management of News International will not be affected.

But how can anyone be assured of that? If there has been a reordering of family control, with extra shares and voting power conferred on the former Mrs Murdoch or the Murdoch offspring, then that is a substantive change which ought to be publicly available for scrutiny. It will affect both the succession at News Corporation (Murdoch is 65 years old, with an escort less than half his age) and the way the controlling trusts choose to cast their vote in a corporate reorganisation. That is material and should be better explained.