Debt cancellation for world's poorest countries all wrapped up: Brown
Some of the world's most impoverished nations, most of them in Africa, moved within striking distance of having billions of dollars in debt written off thanks to a breakthrough agreement at the IMF.
International Monetary Fund policymakers meeting here approved a plan drafted by the Group of Eight industrialized countries that would cancel an estimated 40 billion dollars in multilateral debt owed by the poorest countries.
About 70 percent is owed to the World Bank, with the remainder due the IMF and the African Development Bank.
"Agreement is now reached on all the elements," British Chancellor of the Exchequer Gordon Brown declared after a one-day session of the 24-member IMF policymaking body.
The announcement marked an abrupt turnaround in the plan's fortunes, as IMF and World Bank officials had been warning that approval here was unlikely this week end in the face of disagreements among key donors.
But Brown said IMF managing director Rodrigo Rato would now call a meeting of the Fund's executive board "to complete the approval of the arrangements to deliver debt relief by the end of 2005."
The proposal must also win the backing of the World Bank. But the Bank's policy-setting body, which convenes here Sunday, is made up of many of the same finance ministers who sit on the IMF panel.
And Brown, who heads the IMF committee, said he was confident the World Bank would adopt the same position as the IMF.
"I look forward to a suscessful conclusion at their discussions as well," he told a press conference.
There was in addition little likelihood that the IMF's 24-member excutive board would reject the policymakers' recommendations.
The initial beneficiaries are expected to be 18 countries, most of them in Africa, that have completed economic reforms mandated by the IMF and the World Bank in exchange for debt relief.
In recent days the G8 plan had appeared to be in jeopardy as non-G8 countries voiced fears the World Bank would not be fully compensated for foregone repayments and would therefore be unable to continue lending to poor countries.
But the Group of Eight -- Britain, Canada, France, Germany, Italy, Japan, Russia and the United States -- on Friday issued a strong pledge to cover costs imposed on the World Bank by the debt cancellation.
The G8 commitment was contained in a letter to World Bank president Paul Wolfowitz signed by finance ministers from all eight countries.
Group of Seven finance ministers, meeting without their Russian counterpart, asserted in a separate statement that they were committed "to fully financing this relief."
The IMF decision was immediately welcomed -- albeit cautiously -- by debt relief campaigners.
"For countries which believed that their debts had already been cancelled, this announcement brings a welcome sigh of relief," the group ActionAid said in a statement.
"But the deal still needs to be expanded to include more countries and to eliminate harmful strings attached."
Oxfam's Max Lawson called the agreement "a real breakthrough."
"The deal that has been sealed by the Fund this week end will provide urgently needed money for education and health care. Eighteen countries will now have all their debts to the IMF cancelled."
A harsher assessment came from Martin Powell of the World Development Movement.
"The IMF's commitments are welcome, but even if the G8 deal goes through -- because over 60 countries need full debt cancellation -- it wouldn't even mark the halfway point in ending the debt crisis," he said.
"Worse still, if more countries are to benefit they will have to implement economic conditions such as privatization and trade liberalization that have been shown to increase poverty."
The 18 countries eligible immediately for relief are: Benin, Boliva, Burkina Faso, Ethiopia, Ghana, Guyana, Honduras, Madagascar, Mali, Mauritania, Mozambique, Nicaragua, Niger, Rwanda, Senegal, Tanzania, Uganda and Zambia.
The G8 plan had been unveiled with great fanfare, raising expectations in Africa where people have already been asking how the benefits are going to be spent, Niger finance minister Lamine Ali Zeine said.
"Since the announcement by the G8 in July we have been under enormous pressure, with people wanting to know what we'll do with the benefits," he said, adding that labor unions in his country had been pressing for salary increases.
International Monetary Fund policymakers meeting here approved a plan drafted by the Group of Eight industrialized countries that would cancel an estimated 40 billion dollars in multilateral debt owed by the poorest countries.
About 70 percent is owed to the World Bank, with the remainder due the IMF and the African Development Bank.
"Agreement is now reached on all the elements," British Chancellor of the Exchequer Gordon Brown declared after a one-day session of the 24-member IMF policymaking body.
The announcement marked an abrupt turnaround in the plan's fortunes, as IMF and World Bank officials had been warning that approval here was unlikely this week end in the face of disagreements among key donors.
But Brown said IMF managing director Rodrigo Rato would now call a meeting of the Fund's executive board "to complete the approval of the arrangements to deliver debt relief by the end of 2005."
The proposal must also win the backing of the World Bank. But the Bank's policy-setting body, which convenes here Sunday, is made up of many of the same finance ministers who sit on the IMF panel.
And Brown, who heads the IMF committee, said he was confident the World Bank would adopt the same position as the IMF.
"I look forward to a suscessful conclusion at their discussions as well," he told a press conference.
There was in addition little likelihood that the IMF's 24-member excutive board would reject the policymakers' recommendations.
The initial beneficiaries are expected to be 18 countries, most of them in Africa, that have completed economic reforms mandated by the IMF and the World Bank in exchange for debt relief.
In recent days the G8 plan had appeared to be in jeopardy as non-G8 countries voiced fears the World Bank would not be fully compensated for foregone repayments and would therefore be unable to continue lending to poor countries.
But the Group of Eight -- Britain, Canada, France, Germany, Italy, Japan, Russia and the United States -- on Friday issued a strong pledge to cover costs imposed on the World Bank by the debt cancellation.
The G8 commitment was contained in a letter to World Bank president Paul Wolfowitz signed by finance ministers from all eight countries.
Group of Seven finance ministers, meeting without their Russian counterpart, asserted in a separate statement that they were committed "to fully financing this relief."
The IMF decision was immediately welcomed -- albeit cautiously -- by debt relief campaigners.
"For countries which believed that their debts had already been cancelled, this announcement brings a welcome sigh of relief," the group ActionAid said in a statement.
"But the deal still needs to be expanded to include more countries and to eliminate harmful strings attached."
Oxfam's Max Lawson called the agreement "a real breakthrough."
"The deal that has been sealed by the Fund this week end will provide urgently needed money for education and health care. Eighteen countries will now have all their debts to the IMF cancelled."
A harsher assessment came from Martin Powell of the World Development Movement.
"The IMF's commitments are welcome, but even if the G8 deal goes through -- because over 60 countries need full debt cancellation -- it wouldn't even mark the halfway point in ending the debt crisis," he said.
"Worse still, if more countries are to benefit they will have to implement economic conditions such as privatization and trade liberalization that have been shown to increase poverty."
The 18 countries eligible immediately for relief are: Benin, Boliva, Burkina Faso, Ethiopia, Ghana, Guyana, Honduras, Madagascar, Mali, Mauritania, Mozambique, Nicaragua, Niger, Rwanda, Senegal, Tanzania, Uganda and Zambia.
The G8 plan had been unveiled with great fanfare, raising expectations in Africa where people have already been asking how the benefits are going to be spent, Niger finance minister Lamine Ali Zeine said.
"Since the announcement by the G8 in July we have been under enormous pressure, with people wanting to know what we'll do with the benefits," he said, adding that labor unions in his country had been pressing for salary increases.
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