G8 scraps poor nations' debts
2005-06-11 15:44
London - Britain's Treasury chief Gordon Brown said on Saturday that G8 finance ministers had agreed on a historic deal to cancel $40bn worth of debt owed by the world's poorest nations.
He said 18 countries, many in sub-Saharan Africa, will benefit immediately from the deal to scrap 100% of the debt they owe to the World Bank, the International Monetary Fund and the African Development Bank.
Up to 20 other countries could be eligible if they meet strict targets for good governance and tackling corruption, leading to a total debt relief package of more than $55bn.
"The G8 finance ministers have agreed 100% debt cancellation for Heavily Indebted Poor Countries," Brown said in London.
Aid agencies welcomed the deal, and said it would save the 18 countries a total of $1.5bn a year in debt repayments, that could now be plowed into health care, education and infrastructure development.
Finance ministers from the United States, Britain, Japan, Canada, Russia, Germany, Italy and France agreed the package at a two-day summit in London.
Nations in sub-Saharan Africa alone owe some $68bn to international bodies. Rich nations long agreed the debt must be relieved but the international community had failed to agree on a formula to tackle the problem.
The package was put forward by Britain and the United States, following talks in Washington last week between US President George W Bush and British Prime Minister Tony Blair.
Eighteen eligible nations
Britain shifted to the US position that the debts should be scrapped outright, rather than rich countries taking on the repayments for the poor countries.
Bush also made a significant concession and agreed that rich nations would provide extra money to the multilateral bodies to compensate for the assets written off, and ensure future aid packages would not affected.
The agreement will initially cover 18 nations eligible for debt relief under the HIPC initiative, including Benin, Bolivia, Burkina Faso, Ethiopia, Ghana, Guyana and Mali. A further nine countries are close to completing the targets for good governance set out under the initiative and would then qualify.
"This is a great deal for people in many of the very poorest countries, it reflects well on (Britain's Treasury chief) Gordon Brown and (US Treasury Secretary) John Snow and is a tribute to the growing global campaigns to beat poverty," said Jamie Drummond, executive director of Data, the organisation founded by U2's Bono.
"This bold step builds serious momentum for an historic breakthrough on doubling effective aid and trade justice at the G8 summit next month."
The Jubilee Debt Campaign called for further action and said at least 62 countries needed 100% debt cancellation in order to meet the United Nations' Millennium Development Goals of reducing poverty, hunger and disease by 2015.
Britain has made tackling poverty in Africa and the developing world a priority for its G8 presidency.
Aid agencies say the G8 leaders must now focus on meeting Britain's target of boosting international development aid by $50bn a year.
- AP