An Agreement On Debt Relief For Poor Lands
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Leaders from the Group of Seven industrial nations agreed today to cut the debt burden of the world’s poorest countries in what they described as a decisive push to alleviate poverty. President Jacques Chirac of France said the relief, mainly for African countries, could total about $65 billion. But Gene Sperling, the national economic adviser to President Clinton, said the amount could approach $90 billion if other creditors join the initiative. Some loans — about $15 billion worth — would be canceled outright, and mechanisms would be put in place to evaluate the countries for other forms of debt relief, based on future economic reforms. If countries outside the Group of Seven ”were to share in this effort, then a full 70 percent of the $127 billion owed by qualifying states could be relieved,” Mr. Sperling said. He estimated that 33 countries could benefit, including Ethiopia, Niger, Nicaragua, Tanzania, Uganda, Ghana, Rwanda and Mozambique. Some charitable organizations have argued for more debt forgiveness, but the lenders oppose setting a precedent of wiping out all of a lender’s debt. The leaders of the group’s members — the United States, Britain, France, Germany, Italy, Canada and Japan — said the resources made available by the relief should be used for health and educational programs, particularly AIDS programs in Africa. Congress would be asked to approve some elements of the plan. The decision came on the first day of a three-day summit meeting devoted largely to Kosovo and the troubled relations with Moscow caused by the war there. Prime Minister Sergei V. Stepashin of Russia joined the seven leaders after their debt discussions, and President Boris N. Yeltsin is expected on Sunday. Samuel R. Berger, President Clinton’s national security adviser, said the debt relief plan would have ”an enormous impact on poorer countries, perhaps more than any other single action taken by the developed countries at any time.” But the reality seems more uncertain. Similar promises in the past have proved agonizingly slow in application. Some of the affected countries cannot meet their debts in any event, so they will not abruptly find themselves with more money. Others struggle to keep current in making payments, but without stable governance the impact on their societies may be slight. ”We are demonstrating we are active and concerned, but unless we really invest in establishing civil society in these countries, we may be pouring water into sand,” said Norbert Walter, the chief economist at Deutsche Bank. ”Opening agricultural markets in Europe and the United States might have provided more real help to these states.” Still, the decision clearly reflects a sense of urgency born of the realization that a program of debt relief for the poorest countries set in motion in 1996 proved too limited, stringent and slow for the more than 400 million people potentially affected. Under the extended plan announced today, the Group of Seven will cancel between $15 billion and $20 billion of official development assistance debt — money lent on easy terms. Mr. Chirac said members of the group would bear the cost of debt relief equitably among themselves. The International Monetary Fund and the World Bank, whose main shareholders are the wealthy nations, made most of the lending, for development. Further relief will be provided by international financial institutions like the monetary fund and by the forgiving of trade debts backed by government guarantees. Businesses that have made loans to qualifying countries will be asked to make similar concessions. |