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G-8 Countries Cancelling Billions in World Debt...


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This is good news, IMO...

'A new deal' for world's poor

G-8 finance ministers agree to cancel debts of 18 nations — and relief could be on the way for as many as 20 more

SANDRO CONTENTA

EUROPEAN BUREAU

LONDON - The world's richest countries have reached a historic deal to cancel at least $40 billion (U.S.) in debts owed by some of the poorest nations.

The deal, reached yesterday by the Group of Eight finance ministers, immediately cancels all debts owed to international lenders by 18 countries, most of them in Africa.

As many as 20 other countries could be eligible for the debt relief if they meet targets on good governance and battling corruption, potentially pushing the total debt cancellation package to $55 billion.

The deal was hailed as a breakthrough by aid groups and high-profile lobbyists who have for years been calling on rich countries to act.

"Tomorrow, 280 million Africans will wake up for the first time in their lives without owing you or me a penny from the burden of debt that has crippled them and their countries for so long," said singer Bob Geldof, who is organizing a series of concerts to help relieve African poverty.

Rock star Bono said the deal liberates millions of poor people from "the bondage of immoral and unjust debts."

Gordon Brown, the British finance minister who chaired the G-8 meeting, called the debt-relief package "a new deal between the rich and poor countries of the world."

"When there are 30,000 children dying every day, and when there are 100 million children not going to school at all in the poorest countries, the need to act is obvious," Brown said.

Aid groups are now setting their sights on the July 6-8 summit of G-8 leaders in Scotland. Their goal is to push the leaders to increase the number of poor countries that benefit from the debt-relief plan to as many as 62.

They also want G-8 countries to reduce trade barriers and subsidies in areas such as agriculture, giving African goods a better chance to compete.

Increased foreign aid is another goal, one that will focus pressure on Canada, Japan and the United States — the G-8 countries, not counting Russia, without a plan to increase international aid to 0.7 per cent of national income.

"If Canada wants to keep its reputation as a country that cares about poverty, it has to commit to 0.7 per cent in aid," Oxfam's policy adviser, Max Lawson, said in an interview.

Gerry Barr, co-chair of Canada's Make Poverty History campaign, said Japan has already sent signals it will likely boost its aid to that level by 2015, leaving Canada and the U.S. as the only holdouts. Canada has promised to meet the goal but its financial commitments over the next few years are well short.

"To be isolated with the world's least generous donor is a very unsatisfying position for Canada to be in," said Barr, whose umbrella group includes major unions and groups working in developing countries.

Canada's finance minister, Ralph Goodale, insists the government can't afford to increase its $3.4 billion (Canadian) in international aid — about 0.3 per cent of national income — to 0.7 per cent.

Canada has announced a doubling of aid to Africa by 2008, to $2 billion. It was also praised by Brown for "major initiatives which made possible an agreement" on debt relief.

Goodale said the deal alleviates "the suffocating effect on human lives in Africa from the debt burdens of the past."

The plan cancels debts owed to the World Bank, the International Monetary Fund and the African Development Bank.

The 18 countries to immediately qualify are Benin, Bolivia, Burkina Faso, Ethiopia, Ghana, Guyana, Honduras, Madagascar, Mali, Mauritania, Mozambique, Nicaragua, Niger, Rwanda, Senegal, Tanzania, Uganda and Zambia. This group will save a total of about $1.5 billion (U.S) a year in debt repayments, money they can now invest in health and education.

Brown said the G-8 will demand "a war on corruption" to make sure the debt relief doesn't end up lining the pockets of African leaders.

The G-8 countries will pay off the debts countries owe to the World Bank and the African bank over the next 40 years. The IMF will pay with its own resources for the cancelling of debts that it is owed.

The United States will pay between $1.3 billion and $1.75 billion (U.S.) over the next decade to fund the debt-relief package. Canada's share during this period will be between $400 million and $500 million (Canadian).

Said U.S. Treasury Secretary John Snow: "This is an achievement of historic proportions."

Brown made clear some G-8 countries might decide to pay off their share of the debts by reducing future aid money.

Additional articles by Sandro Contenta

http://www.thestar.com/NASApp/cs/ContentServer?pagename=thestar/Layout/Article_Type1&c=Article&cid=1118526611195&call_pageid=968332188492&col=968793972154&t=TS_Home

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