$4.8bn debt relief for poor nations

The International Monetary Fund said yesterday it had approved a $4.8 billion package to cancel the debts of 20 of the world's poorest countries early next year, under a plan launched in June by the Group of Eight industrialised nations.

The IMF's portion of the multilateral debt relief initiative will be covered in part by profits from a 1999 off-market gold transaction and contributions from 43 countries to the IMF's lending facility for poor countries.

The IMF said it had commitments from donors to fill a $285 million financing gap in the package.

The World Bank and African Development Fund are likely to announce their packages as early as next week.

Among the countries to benefit are Benin, Bolivia, Burkina Faso, Zambia, Uganda, Cambodia, Tajikistan, Ethiopia, Ghana, Madagascar, Honduras, Guyana, Senegal, Nicaragua, Rwanda, Niger and Mali.

To satisfy some donor concerns about whether money resulting from the debt relief will be spent well, the IMF will conduct a 'spot check' of recipient countries' economic policies and their strategies for reducing poverty, IMF policy director Mark Allen told reporters.

"We're not trying to create new hurdles ... but it will give us some comfort," he said.

The IMF agreement covers debt owed to the fund at the end of 2004. There is not provision for debt relief of debt issued after Jan. 1, 2005, Allen said.

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