G7 agree to write off debt
The G7 group of the world’s wealthiest nations is willing to write off up to 100 per cent of the debt owed by the world’s poorest countries, Chancellor of the Exchequer Gordon Brown has said.
Speaking at a news conference on Saturday after the meeting of G7 finance ministers, Mr Brown said: “We are willing to provide as much as 100 per cent debt relief on all multi-lateral debt for individual Hipc (highly indebted poor countries).”
The Chancellor, chairing the G7 talks, had pressed for a complete write-off of African debt and a doubling of aid flows to help the world’s poorest nations to $100 billion (£53 billion) a year, but Mr Brown’s proposal for an international finance facility earlier ran into US opposition.
Although the Treasury believes the scheme – which works by floating bonds on financial markets – to be feasible and deliverable, US Treasury under-secretary John Taylor begged to differ.
Mr Taylor said: “Not only does the IFF not work for the US, we don’t need the IFF,” he told journalists ahead of the meeting of G7 finance ministers in London.
Mr Taylor also poured cold water on the notion that debt payments owed to the IMF could be funded through the more efficient use of the IMF’s gold reserves.
The US is in favour of switching money from loans to grants, he said.
EU Trade Commissioner Peter Mandelson last night said the US’s intransigence on the IFF was “discouraging”.
“But it doesn’t mean to say that’s the end of it,” he added.
“Just because the Americans choose not to sign up to it, it doesn’t mean the rest of us shouldn’t either.”
Mr Brown – who is overseeing Britain’s presidency of the G8 and EU in 2005 – wants other countries to back his “Marshall Plan” for the developing world – which includes wiping out debts for the poorest countries, making trade rules fairer and finding new sources of long-term aid.
He has described 2005 as “the make or break” year in the fight against global poverty and pledged to cover ten per cent of the £10.75 billion owed by the world’s 70 poorest countries to multinational agencies such as the IMF, the World Bank and the African Development Bank over the next decade.
On Friday, Nelson Mandela, the former South African president, spoke at a dinner of G7 ministers, and pressed other countries to boost aid contributions.
There he said: “We are here to claim justice.
“Do not delay while poor people continue to suffer
“I urge you to act tonight.”
The weekend gathering comes 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.
