LONDON, June 11: The world’s richest nations struck an historic deal on Saturday to write off immediately all multilateral debt owed by 18 of the world’s poorest countries, mostly in Africa, amounting to $40 billion. Uganda, Rwanda and Ethiopia gave a cautious welcome to the cancellation of their debt by the Group of Eight (G8) meeting in London, while aid groups called for much greater efforts to tackle global poverty.
“Eighteen countries will have their debts cancelled immediately worth around $40 billion,” British Chancellor of the Exchequer Gordon Brown told a news conference after the meeting of G8 finance ministers.
The decision taken by the G8 — the United States, Britain, Canada, France, Germany, Italy, Japan, and Russia — concerns debt owed to the World Bank (WB), the International Monetary Fund (IMF) and the African Development Bank (ADB).
Brown said the G8 was “fully committed to meet the full cost” borne by the three institutions, though he did not disclose how this would be achieved. The issue had divided members ahead of the deal being struck.
US Treasury Secretary John Snow said an “historic moment” had been reached, clearly delighted that the G8 had backed US-British plans.
The agreement was an endorsement of proposals which arose from White House talks between US President George W. Bush and British Prime Minister Tony Blair last Tuesday, ahead of July’s G8 summit in Scotland.
“Working with the finance ministers... we have been able to implement the vision of George Bush and Tony Blair on this extraordinary important issue,” Snow said.
The ministers also agreed nine other countries would become eligible for 100 per cent debt relief totalling an extra $11bn over the next 12 to 18 months.
Thereafter 11 nations could receive similar debt cancellation of $4.0 billion, bringing the total amount of debt relief to $55 billion, added Brown.
The 18 nations to benefit immediately comprised: Benin, Bolivia, Burkina Faso, Ethiopia, Ghana, Guyana, Honduras, Madagascar, Mali, Mauritania, Mozambique, Nicaragua, Niger, Rwanda, Senegal, Tanzania, Uganda and Zambia.
They are the first to qualify for eligibility for a debt relief joint initiative backed by the three financial institutions.
The HIPC (Heavily Indebted Poor Countries) initiative offers debt relief to the world’s most impoverished nations that agree to undertake economic reform.
