G7 balk at debt relief plan
Finance ministers of the world’s seven leading developed nations have balked at a plan to write off debt relief for the world’s poorest countries.
Chancellor of the Exchequer Gordon Brown, currently chair of the International Monetary Fund (IMF), pledged to write off huge chunks of debt owed to the World Bank and other financial institutions but his foreign ministerial counterparts were less quick to follow suit.
Mr Brown pledged to axe £100 million a year to help more than 30 countries pay off debts owed to the World Bank and African Development Bank.
Fourteen countries currently qualify for debt relief under the “heavily indebted poor countries initiative”.
The new proposals would have meant 18 low-income countries such as Afghanistan and Cambodia would be entitled to financial help.
Britain holds around eight per cent of the total debt owed to the World Bank and the other banks.
Although the idea received the backing of America, France and Germany resisted the overtures from the British government.
But G7 ministers did agree to “the sustainability of debt of the poorest countries by making progress on debt relief and grant financing”.
The G7 is comprised of Britain, the US, Japan, Germany, France, Italy and Canada.
With the UK to assume the rotating presidency of the EU and the G8 next year (which includes Russia), Mr Brown is keen to lead the debt relief by example in the hope of winning more donations for world development initiatives.
Mr Brown has said unsustainable debt is a “burden” on the present, depriving millions of a future and repeating “the cycle of poverty, illiteracy and disease”.
