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There is a catch in tsunami aid

Many fear much of the 'aid' will come as loans that need to be paid back.
PTI | By Agence France-Presse, Tokyo
UPDATED ON JAN 11, 2005 06:19 PM IST

The billions of dollars promised by world leaders after Asia's devastating tsunamis may seem like unparalleled generosity but recipient countries should beware there is also fine print.

As governments race to top one another by offering the biggest package, much of the "aid" will arrive in the form of loans that will need to be paid back, contracts for donor countries' companies or, many fear, will not come at all.

"I see no good reason to give loans. They're poor, we're rich, they need the money and I don't see why we need to ask for it back over the next 10 or 20 years," said David Roodman, a research fellow at the Center for Global Development in Washington.

"It serves to inflate the amount that's being given," he said.

Ahead of Tuesday's tsunami aid conference in Geneva, Australia has climbed to number one on the donors list by announcing the biggest pledge in its history: one billion Australian dollars, equivalent to $762 million.

But Australia would slip to second or third place if taken into account that half of its pledge is in interest-free loans to Indonesia.

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