MercoPress. South Atlantic News Agency

Immediate debt relief for “poorest” countries

The Group of Eight, G8, the world's most industrialized nations agreed in London to cancel “100 percent” of the multilateral foreign debt of 18 poor countries, including Bolivia, Honduras and Nicaragua.

Speaking at a press conference in his role as host of the two-day summit of G8 Finance ministers, British Chancellor of the Exchequer Gordon Brown said a total of 40 billion US dollars debt from the poorest nations would be cancelled immediately.

The first beneficiaries of Saturday's decision are Benin, Bolivia, Burkina Faso, Ethiopia, Ghana, Guyana, Honduras, Madagascar, Mali, Mauritania, Mozambique, Nicaragua, Niger, Rwanda, Senegal, Tanzania, Uganda and Zambia.

In 12-18 months, another group of nine nations is scheduled to be accepted into the debt cancellation plan, totaling an additional 11 billion.

"We are conscious of the abject poverty that so many countries and individuals face. We're being driven forward by the urgent need to act. We've found ourselves united with a shared purpose" stressed Gordon Brown.

US Treasury Secretary John Snow called the deal "an achievement of historic proportions." Debt relief campaigners welcomed the deal but demanded more.

Hailing the accord, rock star Bob Geldof said, "Tomorrow 280 million Africans will wake up for the first time in their lives without owing you or me a penny from the burden of debt that has crippled them and their countries for so long."

A third group of 11 nations currently involved in civil war are in line for debt cancellation once conditions outlined in the program are met.

In all the 38 nations included in the Heavily Indebted Poor Countries (HIPC) initiative launched by the World Bank in 1996 owe 55 billion US dollars to international multilateral organizations, 44 billion to the World Bank, 6 billion to the International Monetary Fund and 5 billion to the African Development Bank.

According to Mr. Brown, donor countries agreed to provide additional funds to the multilateral institutions to make up for their loss of income.

He said the deal was the "most comprehensive" agreement on debt relief ever achieved at a G8 conference.

Chancellor of the Exchequer Brown explained that the debt cancellation is contingent "on the countries' adoption of measures regarding transparency and the struggle against corruption," so as to ensure the money saved - some 1.5 billion US dollars a year in debt repayment - will be spent on education, health and other areas.

The meeting's final declaration describes as "essential that developing countries implement policies that foster economic growth, sustainable development and poverty reduction." It also mentions as prerequisites "transparent" finances and institutions and "economic stability" to foster private enterprise and attract investment.

Mr. Brown said the ministers also studied ways to combat AIDS and pledged to ensure "universal access" to anti-AIDS medication by 2010.

The G8 also pledged to consider a proposed tax on airline tickets that could help fund aid. Snow repeated US opposition to the idea put forward by France and Germany but said it would not the block the plan if others wanted to implement it.

Finally the G8 called on oil producing countries to contribute to a trust fund designed to help poor countries cope with the hardships deriving from the rising price of crude oil and falling prices of raw materials.

The group also called for a commitment to progress in the Doha Round of the World Trade Organization (WTO), calling it its top trade-policy priority this year. The WTO ministers' meeting in Hong Kong in December stands to take a "key step" toward opening the world's wealthiest markets to developing nations, Brown said

African countries cheered the deal though some questioned the choice of beneficiaries. "Debt cancellation will provide us with relief on the budget. It will give us enough money to spend in education, health and other social sectors," said Zambia's Finance Minister Ng'andu Magande.

German Finance Minister Hans Eichel said that the value of debt relief could rise to about 55 billion dollars as other countries became eligible for help.

The G8 also pledged to consider a proposed tax on airline tickets that could help fund aid. Snow repeated US opposition to the idea put forward by France and Germany but said it would not the block the plan if others wanted to implement it.