G7 Launches Bid to Wipe Out Poor Nations' Debt
By REUTERS
Published: February 5, 2005
Filed at 1:17 p.m. ET
LONDON (Reuters) - The Group of Seven wealthy nations on Saturday pledged to help rid the world's poorest countries of their crippling debt, launching a program that fell short of the immediate action demanded by Africa.
British finance minister Gordon Brown, hosting G7 talks in London this weekend, failed to secure U.S. backing for his proposals to stump up an extra $50 billion a year for poor countries and to completely write off their debts.
A compromise deal pledged only that the G7 would look at cancelling up to 100 percent of the debts owed to international institutions by the poorest countries on an individual basis.
Brown, who has declared 2005 as a make or break year for Africa, still hailed the deal as a major break-through. ``This will be seen as the 100 percent debt relief summit,'' he said.
Aid organizations also saw the agreement as an important first step but they wanted to see words turn into action.
``It's better than expected but short of what it could have been, said Romilly Greenhill of ActionAid International.
The case-by-case approach may also disappoint former South African leader Nelson Mandela who launched a direct, passionate appeal for immediate debt relief to the G7 before their talks.
Mandela called for comprehensive aid now - ``not just small amounts now and again, here and there.'' The 86-year-old political prisoner-turned democracy champion was blunt. ``Do not delay while poor people continue to suffer.''
Sub-Saharan Africa owes around $70 billion to multilateral lenders such as the World Bank and International Monetary Fund.
Brown said the public agencies had to come up with plans on how to deliver debt relief without cutting existing resources.
Under his original plans, rich countries would have provided guarantees to raise money in the capital markets to double aid now, and use gold reserves to fund a debt write-off.
The U.S. had said these proposals were unacceptable but the G7 agreed to examine them further after a heated, sometimes angry debate at a dinner for the ministers on Friday.
The G7 also extended to the end of this year a three-month debt moratorium to countries devastated by the Dec. 26 tsunami that has killed hundreds of thousands. The ministers from the United States, Japan, Germany, Britain, France, Italy and Canada, were joined in London by finance chiefs from richer developing nations China, India, Brazil and South Africa, along with Russia, which has been attending G7 meetings for several years.
The drive to include these developing power-houses reflects how fast these economies are growing and the impact they are having on global economic trends.
Ministers from the broader Middle East and North Africa region will be invited to the next G7 meeting.
BACK SEAT FOR OTHER ISSUES
The bulk of the meeting was devoted to Africa's plight, put brought to the fore by Britain, the current president of the rich nations' club.
But ministers also discussed ways of reducing volatility in the oil market after prices hit record highs last October.
In discussions on currency management and economic risks they did not stray from a year-old statement calling for less volatile currency markets and greater exchange rate flexibility.
The latter point was aimed mainly at China, under pressure from the G7 to push up the value of its yuan currency, which critics say is too low and makes life difficult for other trading nations.
Beijing says it understands the concern but will not be rushed into action before it has first completed reforms of its financial sector. |
