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Finance News |
G7:-100pc debt relief for poorest states
Sunday, February 06 13:05:38
Finance ministers from the world's richest countries have agreed to offer up to 100pc debt relief for some of the world's poorest nations.
The pledge came at the end of a two-day meeting in London of ministers from G7 countries and was announced by Britain's Chancellor of the Exchequer, Gordon Brown.
The same meeting saw the US veto a British-led initiative to tackle global poverty, on the basis that it was unworkable.
The programme for tackling poverty in the developing world received strong moral support from former South African president Nelson Mandela, who was attending the G7 conference.
"This is the first time as much as 100 percent debt relief has ever been detailed in a G7 communique," UK Chancellor of the Exchequer Gordon Brown told reporters at the meeting's conclusion.
In a statement, finance chiefs from the UK, Canada, France, Germany, Italy, Japan and the United States said G7 countries were "agreed on a case-by-case analysis of HIPC countries, based on our willingness to provide as much as 100 pc multilateral debt relief."
The Heavily Indebted Poor Countries Initiative (HIPC) is a joint project of the World Bank and the International Monetary Fund (IMF) that offers debt relief to the world's most impoverished nations that agree to undertake economic reform.
Brown added that for the first time the IMF was looking to the use of its gold to help finance debt relief. He wants the world's richest countries to cancel the USD80 bn of debts owed by poor nations to the IMF, the World Bank and the African Development Bank. He believes the IMF can help achieve this by revaluing its massive gold holdings.
Still, the project is not without its critics. Dismissing the project, US Undersecretary of the Treasury John Taylor said Friday that the plan did not work for the US.
But in a more conciliatory note, Taylor said the US "was deeply committed to helping the poorest countries".
The US has cited legal problems in connection with Brown's plan, known as the International Finance Facility (IFF), and has its own competing plan which includes turning World Bank loans into grants.
The UK in the meantime remained committed to its plan, with International Development Secretary and rising star in the Labour government Hilary Benn saying he believed a solution would be found, with or without the US.
"You don't need everybody on board to launch the IFF," Benn said in a pointed remark to the BBC.
Separately, France and Germany announced a joint initiative to support immunisation in Africa to be financed along the lines of the UK's IFF development proposal.
Finance officials from the two countries, attending a Group of Seven meeting here, approved a statement recognising "the need for a sizeable increase in stable and predictable resources devoted to development financing.
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