PHA-Exchange> G8 cancels debt of the world's poorest countries

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G8 cancels debt of the world's poorest countries
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.BMJ 2005;330:1407 (18 June), doi:10.1136/bmj.330.7505.1407
http://bmj.bmjjournals.com/cgi/content/full/330/7505/1407?etoc

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The world's richest countries will assume the debt burden of 18
of the world's poorest countries ­ about $40bn (£22bn; E33bn) ­
after a final agreement reached in London last weekend by fi-
nance ministers meeting ahead of next month's summit of the G8
(the world's most industrialised countries) in Scotland.

The deal will include all debts owed by the qualifying countries
to the World Bank, the African Development Bank, and the Inter-
national Monetary Fund. Fourteen of the countries included in
the deal are African ­ Benin, Burkina Faso, Ethiopia, Ghana,
Madagascar, Mali, Mauritania, Mozambique, Niger, Rwanda, Sene-
gal, Tanzania, Uganda, and Zambia. The four others are in Latin
America ­ Bolivia, Guyana, Honduras, and Nicaragua.

These countries had already qualified for debt restructuring un-
der the World Bank's Heavily Indebted Poor Countries Initiative.
Nine more African countries are also likely to qualify for debt
cancellation under these terms in the next 18 months, followed
by 11 more in the next few years. The total debt cancelled for
all 38 countries will amount to about $55bn.

A statement issued over the weekend by the G8 finance ministers
also set a goal of "universal access for AIDS treatment by 2010
and development of vaccines, including for HIV and malaria."

The cancelled payments will add up to about $1.5bn a year. The
G8 members will themselves make up the shortfall to the lending
institutions. Britain will give about $700m-900m to this end in
the next decade, and the US will contribute approximately
$1.5bn. New rules will be drawn up by the World Bank to ensure
that future loans are not swallowed up by government corruption.

The announcement will be seen as a victory for Prime Minister
Tony Blair, who was in Washington, DC, last week to push for a
deal on African aid and debt. But he failed to secure an Ameri-
can commitment to match European governments' recent pledges to
increase aid to 0.7% of gross national income by 2015.

Nevertheless, according to the UK's chancellor, Gordon Brown,
the extra aid pledged by other countries is sufficient to meet
the target, set by Mr Blair's Africa Commission, of immediately
increasing aid to Africa by $25bn; BMJ 2005;330:622
http://bmj.bmjjournals.com/cgi/ijlink?
linkType=FULL&journalCode=bmj&resid=330/7492/622-a

In addition to the European Union boosting its overseas develop-
ment aid, Canada and Japan have promised to double their aid to
Africa by 2008.




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