Chancellor defends debt agreement

Sunday, 6 February 2005 12:00 AM

The G7 summit in London has ended with finance ministers agreeing to take a series of measures to reduce debt and boost development in the world's poorest countries.

Chancellor Gordon Brown, who chaired talks between the G7 group of rich industrialised countries, hailed the agreement as a major breakthrough.

He revealed G7 finance ministers have agreed to consider measures to provide 100 per cent debt relief for the world's most impoverished countries, on a case-by-case basis.

"We are willing to provide a 100 per cent debt relief for the world's poorest countries. This is the first time we have ever made this offer," Mr Brown told journalists following yesterday's summit at London's Lancaster House.

"We believe that the world can look forward, for the first time, to removing the burden of debt to the poorest countries.

"I believe this summit will be remembered as the summit for 100 per cent debt relief," the Chancellor added.

Despite hailing the success of the summit, Mr Brown failed to secure agreement on his proposal for a new International Finance Facility which would boost development aid by $50 billion (£26.7 billion) a year and completely write off the debts of poorer countries.

The original plans were rejected by the US, who poured cold water on the notion that debt payments owed to the International Monetary Fund (IMF) could be funded through the more efficient use of the facility's gold reserves.

In spite of US objections, G7 ministers agreed to examine Mr Brown's proposals further, following a "heated" argument over dinner on Friday, according to agency reports.

Aid organisations have welcomed the agreement as a step towards fighting world poverty, but warned well-meaning words must turn into action.

"It's better than expected but short of what it could have been," said Romilly Greenhill of ActionAid International.

The agreement to consider debt relief for poorer countries on a case-by-case basis may also disappoint former South African president, Nelson Mandela, who had called on the G7 group to deliver comprehensive aid immediately.

Speaking on Friday's dinner for G7 ministers, Mr Mandela warned: "Do not delay while poor people continue to suffer."

"I urge you to act tonight."

The weekend gathering came ahead of the G8 summit - which comprises the G7 and Russia - in Scotland in July.

The G7 is comprised of Britain, Canada, France, Germany, Italy, Japan and the US.

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