U.S., Britain To Present Debt Relief Plan to G7 Finance Ministers

Main Category: Aid / Disasters
Article Date: 12 Jun 2005 - 0:00 PDT

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The United States and Britain this week reached an agreement on a plan to cancel the debt of the world's poorest nations and are expected to present their proposal to finance ministers from the Group of Seven industrialized nations on Friday during a meeting in London, the... New York Times reports. According to an unnamed U.S. official, U.S. Treasury Secretary John Snow and U.K. Chancellor of the Exchequer Gordon Brown will present the proposal to the finance ministers from Britain, Canada, France, Germany, Italy, Japan and the United States. The proposal would cancel an estimated $16.7 billion in debt owed by 18 countries, most in Africa, to international lenders such as the World Bank, International Monetary Fund and African Development Bank. The deal also would allow the countries to use an estimated $1 billion in annual interest payments for economic development and health, education and social programs. The debt cancellation proposal likely will be "the only big issue" leaders of the Group of Eight industrialized nations -- which includes the G7 countries and Russia -- discuss at their summit next month in Gleneagles, Scotland, according to the Times.

Plan Details
The heavily indebted countries eligible under the proposal are Benin, Bolivia, Burkina Faso, Ethiopia, Ghana, Guyana, Honduras, Madagascar, Mali, Mauritania, Mozambique, Nicaragua, Niger, Rwanda, Senegal, Tanzania, Uganda and Zambia. The program eventually could be expanded to include at least nine other countries. All countries eligible for debt cancellation would have to demonstrate that they have taken steps to improve governance, reduce corruption and pursue what lenders define as sound economic policies (Becker/Stevenson, New York Times, 6/10). Officials said that further cancellation is possible as developing countries make further economic and social reforms (Hitt, Wall Street Journal, 6/10).

Reaction, Annan Comments
Advocacy groups that have been working for debt relief welcomed the announcement, the Times reports (New York Times, 6/10). However, some groups said that at least 62 countries, including large debtors such as Nigeria and Indonesia, should be included in the program (BBC News, 6/10). They said that these 62 countries require full debt cancellation in order to meet the U.N. Millennium Development Goals (Johnson, AP/Hartford Courant, 6/10). U.N. Secretary-General Kofi Annan during a news conference on Thursday urged all wealthy nations to increase aid, improve trade and provide debt relief to the world's poor countries. He called this year a "make-or-break moment" for developing countries, adding that the next three months offer three "critical opportunities" for wealthy nations to demonstrate their commitment to MDGs. During the U.N. General Assembly meeting later this month, the G8 summit in July and the U.N. summit in September, it is critical that world leaders take steps to reach MDG targets, Annan said (AP/Yahoo! News, 6/10). He also praised the European Union for its pledge to nearly double development aid in five years, adding, "I look to all donors to follow their example."

Wealthy Nations Should Increase Aid to Sub-Saharan Africa, Reports Say
The United Nations this week released two reports detailing conditions in sub-Saharan Africa and calling for increased aid and debt relief measures for the continent. The U.N. Millennium Project released a report showing that almost half of all deaths among children under age five occur in sub-Saharan Africa. The report also says that half of the 11 million annual childhood deaths are from five diseases -- pneumonia, diarrhea, malaria, measles and HIV/AIDS. The second report, released by the U.N. Development Programme, provides a statistical analysis estimating that 28 million African children will die over the next decade if the continent continues on its current development path. The upcoming G8 summit "provides a critical opportunity to prevent the potential human development costs identified in this report from becoming actual costs," the report says, adding that an estimated 5.1 million African children will die in 2015 (Dugger, New York Times, 6/10).

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