G8 Finance Ministers deliver deal to cancel debt

Published: 1 November 2005

Meeting over the weekend in London, Finance Ministers from the world's richest countries agreed to cancel 100 per cent of the debts of 18 countries, but stopped short of extending their deal to all of the poorest countries.

Meeting over the weekend in London, Finance Ministers from the world's richest countries agreed to cancel 100 per cent of the debts of 18 countries, but stopped short of extending their deal to all of the poorest countries.

The deal covers US$50bn of debts owed by poor countries to the World Bank, the International Monetary Fund and the African Development Bank. The 18 initial countries, 14 of them in Africa, qualify because they have already been through the Heavily Indebted Poor Countries (HIPC) debt relief program. Other countries are expected to qualify when they meet the economic and political requirements.

Oxfam welcomed the Finance Ministers' agreement but said it did not go far enough, only covering between 10 and 20 per cent of what's required and not extending to all the countries that need it.

"It's great for the countries that are included," said Policy Adviser Max Lawson. "But there are many other countries that are performing well - such as Vietnam and Sri Lanka - which are not included and will get nothing out of this deal.

"Today's agreement is important because it endorses the principle of 100 per cent debt cancellation and opens up the possibility of countries outside the current HIPC debt relief scheme also benefiting in the future. The fight now on debt is to get 100 per cent cancellation for all the countries that need it."

"But debt is only one part of the overall picture. With three weeks to go until the G8 summit in Gleneagles, the pressure is now on for world leaders to announce a doubling of aid by $50 bn and serious progress on reforming unfair trade rules.

"The race to Gleneagles is now on, but there are still many hurdles for G8 leaders to clear. Thiis first hurdle - debt cancellation - is only worth $2bn a year at most for poor countries. G8 leaders now need to urgently pick up the pace, respond to the calls of millions of campaigners around the world, and put up an extra $50bn of aid to fund the fight against poverty."

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