G8 / Finance Chiefs Cancel Debt of 18 Nations
LONDON (AP) — The world’s wealthiest nations formally agreed today to cancel at least $40 billion of debt owed to international agencies by the world’s poorest lands, most of them in Africa.
After late-night talks in London, the finance ministers of the so-called G-8 group of industrialized nations announced that the deal, long in negotiation, had been designed to avoid damaging the ability of international lenders like the World Bank, the African Development Bank and the International Monetary Fund to continue helping other poor countries.
“This is a historic moment,” said John Snow, the United States Treasury Secretary, one of the participants. “A real milestone has been reached.”
Saturday’s deal was expected to ease the 18 poorest countries’ annual debt burden by $1.5 billion. They are Benin, Bolivia, Burkina Faso, Ethiopia, Ghana, Guyana, Honduras, Madagascar, Mali, Mauritania, Mozambique, Nicaragua, Niger, Rwanda, Senegal, Tanzania, Uganda and Zambia. All must take anti-corruption measures.
Gordon Brown, the British chancellor of the exchequer, asked at the news conference whether debt relief was also conditional on good government practices by the recipients, said part of the deal was for poor countries to spend the money they saved on debt servicing on health, education or the relief of poverty.
The agreement came after months of negotiations in which the United States had been pressing the other G-8 countries — Britain, Germany, France, Italy, Canada, Japan and Russia — to agree that the solution to poor countries’ indebtedness was to cancel their debt burden completely rather than seek simply to ease it by taking over interest repayments.
“It is my hope today that this reform will conclusively end the destabilizing lend-and-forgive approach to development assistance in low-income countries,” Mr. Snow said. In future, he said, “grants would be used to ensure that countries do not quickly re-accumulate unsustainable debts.”
The agreement, which followed talks in Washington this week between President Bush and Prime Minister Tony Blair of Britain, was struck less than four weeks before the G-8 leaders hold a summit meeting at Gleneagles, Scotland. Mr. Blair is the current chairman of the G-8 group and has placed the relief of African poverty along with global warming at the head of an ambitious agenda.
Advocacy groups and charities have pressed for a deal on debt relief for years and some welcomed the agreement Saturday, saying it cleared the way for a broader announcement on combating African poverty at Gleneagles.
“We want a comprehensive breakthrough on more, better development assistance as well as trade reform at Gleneagles and with debt mostly taken care of we can keep up the pressure for a large package,” said Seth Amgott, a spokesman for a coalition of American charities and advocacy groups called ONE.
Some other groups noted that a further 44 countries were still burdened by debt to international lenders. Britain is also pressing for a doubling of international aid to Africa, but it is not clear whether that goal will be reached before the Gleneagles summit.
Significantly, a statement by the G-8 finance ministers did not formally exclude other initiatives to fight poverty, including a tax on airline tickets proposed by France and Germany and a British proposal to raise money for poverty relief on international financial markets.
Both of those ideas are opposed by the United States, but their inclusion seemed to be part of a trade-off to secure agreement on the cancellation of debt. Asked about American opposition to an aviation tax on Saturday, Mr. Snow said: “Our position is the same.”
Gordon Brown, the British chancellor of the exchequer, said G-8 countries had agreed to compensate the World Bank and the African Development Bank in particular for forfeiting interest payments on poor countries’ debt, so that those groups would have the income to make new loans to other countries. “We could not contemplate a situation” where debt cancellation for some poor countries was made at the expense of other poor countries, he said.
The United States agreed to pay up to $1.75 billion in compensation to international lenders over the next 10 years, while Britain agreed to pay up to $960 million. Other G-8 countries made their own, undisclosed pledges; more pledges are expected from other members of the World Bank and the International Monetary Fund later this year.
Mr Brown said Saturday’s agreement would affect immediately some $40 billion in debt, including servicing costs. But the amount it will actually cost the G-8 to compensate the international lenders is $16.7 billion — a calculation based on the payments the international lenders would have expected to receive from 18 debt countries between now and 2015, the officials said.
Overall, international lenders were owed some $55.6 billion, Mr Brown said. The finance ministers said G-8 members would compansate the World Bank and the African Development for their losses. But the International Monetary Fund would be able to use “existing resources” of its own to cancel the $6 billion it is owed by poor countries. Mr. Snow said this would require “no use of gold” — rebutting proposals by Mr Brown for the I.M.F. to sell or revalue gold reserves to finance debt cancellation.
N, June 11 (AP) - Finance ministers from the Group of 8 industrialized nations agreed Saturday to cancel at least $40 billion worth of debt owed by the world's poorest nations.
The British chancellor of the exchequer, Gordon Brown, said that 18 countries, many in sub-Saharan Africa, would benefit immediately from the deal to scrap 100 percent of the debt they owe to the World Bank, the International Monetary Fund and the African Development Bank.
As many as 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 $55 billion.
"The G-8 finance ministers have agreed to 100 percent debt cancellation for heavily indebted poor countries," Mr. Brown told a news conference in London.
Aid agencies welcomed the deal, saying it would save the 18 countries a total of $1.5 billion a year in debt repayments that could now be used for health care, education and infrastructure development.
Finance ministers from the United States, Britain, Japan, Canada, Russia, Germany, Italy and France agreed to the package during a two-day meeting in London. The initiative was begun by the World Bank and the International Monetary Fund in 1996.
"A real milestone has been reached," said Treasury Secretary John Snow. "President Bush's commitment to lift the crushing debt burden on the world's poorest countries has been achieved. This is an achievement of historic proportions."
Nations in sub-Saharan Africa alone owe some $68 billion to international bodies. Rich nations had long agreed the debt must be relieved, but the international community could not agree on a formula for tackling the problem.
The package agreed to on Saturday was put forward by the United States and Britain after talks in Washington this week between Mr. Bush and Prime Minister Tony Blair.
Britain originally wanted rich countries to assume the repayments for the poor countries, to protect the lending groups' ability to create future aid packages.
But eventually, Britain agreed with the American position that the debts be scrapped outright.
But Mr. Bush agreed that rich nations would provide extra money to the lending groups, to compensate for the assets being written off. The agreement will initially cover 18 nations eligible for debt relief under the initiative, including Benin, Bolivia, Burkina Faso, Ethiopia, Ghana, Guyana and Mali.
Nine other countries are close to completing the targets for good governance set out under the initiative. They too would qualify once the goals are met.
"This is a great deal for people in many of the very poorest countries, it reflects well on Gordon Brown and John Snow and is a tribute to the growing global campaigns to beat poverty," said Jamie Drummond, executive director of DATA, a lobbying group that campaigns against AIDS and poverty in Africa. "This bold step builds serious momentum for a historic breakthrough on doubling effective aid and trade justice at the G-8 summit next month."
Britain has made tackling poverty in Africa and the developing world a priority for its presidency of the Group of 8.
Mr. Blair's approach has three prongs: increasing aid, eliminating debt and removing export subsidies and other trade barriers that make it difficult for developing nations to compete.
Aid agencies say the Group of 8 leaders must now focus on meeting Britain's target of increasing international development aid by $50 billion a year.
Some question whether agreement on that will be reached at the Group of 8 summit meeting scheduled for early July in Gleneagles, Scotland.
The United States and Japan both reject a British proposal to raise that money by selling bonds on the world capital markets.
Like the United States, Japan prefers its own bilateral aid programs, and France is pushing an initiative for an international aviation tax.
After late-night talks in London, the finance ministers of the so-called G-8 group of industrialized nations announced that the deal, long in negotiation, had been designed to avoid damaging the ability of international lenders like the World Bank, the African Development Bank and the International Monetary Fund to continue helping other poor countries.
“This is a historic moment,” said John Snow, the United States Treasury Secretary, one of the participants. “A real milestone has been reached.”
Saturday’s deal was expected to ease the 18 poorest countries’ annual debt burden by $1.5 billion. They are Benin, Bolivia, Burkina Faso, Ethiopia, Ghana, Guyana, Honduras, Madagascar, Mali, Mauritania, Mozambique, Nicaragua, Niger, Rwanda, Senegal, Tanzania, Uganda and Zambia. All must take anti-corruption measures.
Gordon Brown, the British chancellor of the exchequer, asked at the news conference whether debt relief was also conditional on good government practices by the recipients, said part of the deal was for poor countries to spend the money they saved on debt servicing on health, education or the relief of poverty.
The agreement came after months of negotiations in which the United States had been pressing the other G-8 countries — Britain, Germany, France, Italy, Canada, Japan and Russia — to agree that the solution to poor countries’ indebtedness was to cancel their debt burden completely rather than seek simply to ease it by taking over interest repayments.
“It is my hope today that this reform will conclusively end the destabilizing lend-and-forgive approach to development assistance in low-income countries,” Mr. Snow said. In future, he said, “grants would be used to ensure that countries do not quickly re-accumulate unsustainable debts.”
The agreement, which followed talks in Washington this week between President Bush and Prime Minister Tony Blair of Britain, was struck less than four weeks before the G-8 leaders hold a summit meeting at Gleneagles, Scotland. Mr. Blair is the current chairman of the G-8 group and has placed the relief of African poverty along with global warming at the head of an ambitious agenda.
Advocacy groups and charities have pressed for a deal on debt relief for years and some welcomed the agreement Saturday, saying it cleared the way for a broader announcement on combating African poverty at Gleneagles.
“We want a comprehensive breakthrough on more, better development assistance as well as trade reform at Gleneagles and with debt mostly taken care of we can keep up the pressure for a large package,” said Seth Amgott, a spokesman for a coalition of American charities and advocacy groups called ONE.
Some other groups noted that a further 44 countries were still burdened by debt to international lenders. Britain is also pressing for a doubling of international aid to Africa, but it is not clear whether that goal will be reached before the Gleneagles summit.
Significantly, a statement by the G-8 finance ministers did not formally exclude other initiatives to fight poverty, including a tax on airline tickets proposed by France and Germany and a British proposal to raise money for poverty relief on international financial markets.
Both of those ideas are opposed by the United States, but their inclusion seemed to be part of a trade-off to secure agreement on the cancellation of debt. Asked about American opposition to an aviation tax on Saturday, Mr. Snow said: “Our position is the same.”
Gordon Brown, the British chancellor of the exchequer, said G-8 countries had agreed to compensate the World Bank and the African Development Bank in particular for forfeiting interest payments on poor countries’ debt, so that those groups would have the income to make new loans to other countries. “We could not contemplate a situation” where debt cancellation for some poor countries was made at the expense of other poor countries, he said.
The United States agreed to pay up to $1.75 billion in compensation to international lenders over the next 10 years, while Britain agreed to pay up to $960 million. Other G-8 countries made their own, undisclosed pledges; more pledges are expected from other members of the World Bank and the International Monetary Fund later this year.
Mr Brown said Saturday’s agreement would affect immediately some $40 billion in debt, including servicing costs. But the amount it will actually cost the G-8 to compensate the international lenders is $16.7 billion — a calculation based on the payments the international lenders would have expected to receive from 18 debt countries between now and 2015, the officials said.
Overall, international lenders were owed some $55.6 billion, Mr Brown said. The finance ministers said G-8 members would compansate the World Bank and the African Development for their losses. But the International Monetary Fund would be able to use “existing resources” of its own to cancel the $6 billion it is owed by poor countries. Mr. Snow said this would require “no use of gold” — rebutting proposals by Mr Brown for the I.M.F. to sell or revalue gold reserves to finance debt cancellation.
N, June 11 (AP) - Finance ministers from the Group of 8 industrialized nations agreed Saturday to cancel at least $40 billion worth of debt owed by the world's poorest nations.
The British chancellor of the exchequer, Gordon Brown, said that 18 countries, many in sub-Saharan Africa, would benefit immediately from the deal to scrap 100 percent of the debt they owe to the World Bank, the International Monetary Fund and the African Development Bank.
As many as 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 $55 billion.
"The G-8 finance ministers have agreed to 100 percent debt cancellation for heavily indebted poor countries," Mr. Brown told a news conference in London.
Aid agencies welcomed the deal, saying it would save the 18 countries a total of $1.5 billion a year in debt repayments that could now be used for health care, education and infrastructure development.
Finance ministers from the United States, Britain, Japan, Canada, Russia, Germany, Italy and France agreed to the package during a two-day meeting in London. The initiative was begun by the World Bank and the International Monetary Fund in 1996.
"A real milestone has been reached," said Treasury Secretary John Snow. "President Bush's commitment to lift the crushing debt burden on the world's poorest countries has been achieved. This is an achievement of historic proportions."
Nations in sub-Saharan Africa alone owe some $68 billion to international bodies. Rich nations had long agreed the debt must be relieved, but the international community could not agree on a formula for tackling the problem.
The package agreed to on Saturday was put forward by the United States and Britain after talks in Washington this week between Mr. Bush and Prime Minister Tony Blair.
Britain originally wanted rich countries to assume the repayments for the poor countries, to protect the lending groups' ability to create future aid packages.
But eventually, Britain agreed with the American position that the debts be scrapped outright.
But Mr. Bush agreed that rich nations would provide extra money to the lending groups, to compensate for the assets being written off. The agreement will initially cover 18 nations eligible for debt relief under the initiative, including Benin, Bolivia, Burkina Faso, Ethiopia, Ghana, Guyana and Mali.
Nine other countries are close to completing the targets for good governance set out under the initiative. They too would qualify once the goals are met.
"This is a great deal for people in many of the very poorest countries, it reflects well on Gordon Brown and John Snow and is a tribute to the growing global campaigns to beat poverty," said Jamie Drummond, executive director of DATA, a lobbying group that campaigns against AIDS and poverty in Africa. "This bold step builds serious momentum for a historic breakthrough on doubling effective aid and trade justice at the G-8 summit next month."
Britain has made tackling poverty in Africa and the developing world a priority for its presidency of the Group of 8.
Mr. Blair's approach has three prongs: increasing aid, eliminating debt and removing export subsidies and other trade barriers that make it difficult for developing nations to compete.
Aid agencies say the Group of 8 leaders must now focus on meeting Britain's target of increasing international development aid by $50 billion a year.
Some question whether agreement on that will be reached at the Group of 8 summit meeting scheduled for early July in Gleneagles, Scotland.
The United States and Japan both reject a British proposal to raise that money by selling bonds on the world capital markets.
Like the United States, Japan prefers its own bilateral aid programs, and France is pushing an initiative for an international aviation tax.
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