Poorest nations to get $23bn debt relief
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As many as 19 of the world’s poorest countries will be placed on the fast track to debt relief today after leading finance ministers put the finishing touches last night to a $23bn assistance package. James Wolfensohn, the World Bank president, said last night: “The deal is done.” Last-minute wrangling at one stage threatened to put in jeopardy the agreement beefing up debt relief. This will go a substantial way towards meeting the objectives of the Jubilee 2000 campaign, backed by the Guardian, which has been seeking a deal to wipe out permanently the unpayable debts built up since the 1970s. Angela Travis, a spokeswoman for Jubilee 2000, said last night that more needed to be done, but she was pleased to hear Mr Wolfensohn say that the door was never closed on further tranches of debt relief. Last night the World Bank president said: “This initiative is the beginning of the solution, not the end. It gives us a chance to deal with the problem of debt relief. But if we declare victory and think that by forgiving debt you are defeating poverty, you are crazy.” He added that the long battle to improve the heavily indebted poor country initiative (HIPC) was over. “As far as I am concerned, HIPC is history. What is now important is to make it work.” Mr Wolfensohn said that the Bank still needed to raise about $300m to bridge a funding gap but he was confident this would be found. A crucial breakthrough in the negotiations came yesterday when Canada offered an extra $40m to the HIPC trust fund. The first beneficiaries of HIPC will be Nicaragua, Tanzania and Mauritania, which have already been assessed and are waiting for the go ahead. Ethiopia and Guinea Bissau also have been assessed but the funds could be held up by internal political strife. The final pieces of the funding jigsaw were put together at a meeting of the World Bank’s development committee in Washington yesterday. With the IMF’s $3bn contribution already secured from the revaluation of IMF gold, Britain and other countries put pressure on rich countries such as Canada and France which were more reluctant to come forward. The UK’s development minister, Clare Short, helped to break the deadlock when, with the agreement of the chancellor, Gordon Brown, she increased the UK’s contribution by $50m to $221m. Soon afterwards Germany agreed to provide $75m. With the European Development Fund set to provide $700m and the United States pledging $600m, UK officials said bilateral contributions had already surpassed the chancellor’s $2bn target. The treasury believes that the funds assembled in Washington should be sufficient to reduce the debt stock of the poorest nations by some $50bn. Mr Brown, who as chairman of a key IMF committee was at the centre of events before leaving for Labour’s conference in Bournemouth, said: “What we are talking about is how to build a virtuous circle of debt relief, poverty reduction and economic development.” Under the proposals, the qualification period for debt relief will be cut from six to three years, although countries will only continue to receive financial help provided they follow economic policies approved by the IMF and agree to channel any money saved into anti-poverty measures. |