MercoPress. South Atlantic News Agency

World Bank agrees to condone poorest countries debt

World Bank members reached an agreement this weekend to condone 55 billion US dollars of debs owed by the world's poorest countries to multilateral credit organizations.

The World Bank's Development Committee and the International Monetary Fund informed of the agreement at the end of the annual WB-IMF joint assembly in Washington.

Leaders of the Group of eight industrialized countries, G8, proposed the debt relief deal at its July summit in Gleneagles, Scotland, but they had to convince the 184 IMF and WB members to ensure the debt cancelling became effective.

The deal was announced by the World Bank president Paul Wolfowitz who said the way was now clear. "Across Africa and around the world, leaders in 38 countries will no longer have to choose between spending to benefit their people and repaying impossible debts off in the legacy of governments past" he said adding that "people from rich and poor countries alike have been moved by the suffering we see in so many parts of the world"

In an initial phase the project will provide debt cancellation worth about 40 billion US dollars to 18 of the world's most impoverished nations - all but four of them in Africa. The four are Bolivia, Honduras, Nicaragua and Guyana

About 70% of the debt is due the World Bank, with the remainder owed the IMF and the African Development Bank. A further 20 countries could also become eligible, which would take the total value of the debt cancellation to 55 billion US dollars.

IMF is set to loose five billion US dollars and the World Bank 42 billion US dollars. Member countries have promised additional funds to help compensate the losses.