Finance Chiefs Cancel Debt of 18 Nations
Finance Chiefs Cancel Debt of 18 Nations
By ALAN COWELL, NY Times
Published: June 12, 2005
LONDON, June 11 - The world's wealthiest nations formally agreed Saturday 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 Group of 8 industrialized nations announced that the deal, long in negotiation, had been intended 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 W. Snow, the United States Treasury secretary, one of the participants. "A real milestone has been reached."
The deal on Saturday 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 anticorruption 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 use the money they saved on debt servicing for health, education or the relief of poverty.
The agreement came after months of negotiations in which the United States had been pressing the other Group of 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 the future, he said, "grants would be used to ensure that countries do not quickly reaccumulate 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 Group of 8 leaders hold a summit meeting at Gleneagles, Scotland. Mr. Blair is the current chairman of the Group of 8 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 on 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 44 more 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 meeting.
Significantly, a statement by the Group of 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."
Mr. Brown said Group of 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 those groups would have the income to make new loans to other countries. "We could not contemplate a situation," he said, where debt cancellation for some poor countries was made at the expense of other poor countries.
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 Group of 8 countries made their own, undisclosed pledges; more pledges are expected from other members of the World Bank and the International Monetary Fund this year.
Mr. Brown said the agreement on Saturday would immediately affect some $40 billion in debt, including servicing costs. But the amount it will actually cost the Group of 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.
Over all, international lenders are owed some $55.6 billion, Mr. Brown said. The finance ministers said Group of 8 members would compensate the World Bank and the African Development Bank 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.
By ALAN COWELL, NY Times
Published: June 12, 2005
LONDON, June 11 - The world's wealthiest nations formally agreed Saturday 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 Group of 8 industrialized nations announced that the deal, long in negotiation, had been intended 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 W. Snow, the United States Treasury secretary, one of the participants. "A real milestone has been reached."
The deal on Saturday 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 anticorruption 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 use the money they saved on debt servicing for health, education or the relief of poverty.
The agreement came after months of negotiations in which the United States had been pressing the other Group of 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 the future, he said, "grants would be used to ensure that countries do not quickly reaccumulate 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 Group of 8 leaders hold a summit meeting at Gleneagles, Scotland. Mr. Blair is the current chairman of the Group of 8 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 on 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 44 more 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 meeting.
Significantly, a statement by the Group of 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."
Mr. Brown said Group of 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 those groups would have the income to make new loans to other countries. "We could not contemplate a situation," he said, where debt cancellation for some poor countries was made at the expense of other poor countries.
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 Group of 8 countries made their own, undisclosed pledges; more pledges are expected from other members of the World Bank and the International Monetary Fund this year.
Mr. Brown said the agreement on Saturday would immediately affect some $40 billion in debt, including servicing costs. But the amount it will actually cost the Group of 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.
Over all, international lenders are owed some $55.6 billion, Mr. Brown said. The finance ministers said Group of 8 members would compensate the World Bank and the African Development Bank 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.
posted by Plucky @ 4:59 AM
0 Comments:
Post a Comment
<< Home