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Saturday, 28 September, 2002, 22:09 GMT 23:09 UK
Rich nations ease $1bn debt mountain
Gordon Brown at IMF meeting
Gordon Brown (centre): United on action

Finance ministers from the world's wealthiest countries have made a commitment to tackle a shortfall of nearly $1bn (640m) in financial support for poor nations.

This is another PR patch-up job on a failing initiative

Julia Tilford

Following an urgent plea, members of the International Monetary and Financial Committee (IMFC) pledged their support to ensure funding of the Highly Indebted Poor Countries (HIPC) initiative.

Gordon Brown, the UK Chancellor of the Exchequer, said the participants were "united in our belief that at this time of economic recovery there is an imperative to shape a new deal between developed and developing countries, so that countries can share in the benefits of globalisation".

HIPC was implemented six years ago as a means for poor countries to restructure debt to more manageable levels.

The scheme aims to reward countries that are trying to introduce economic reforms, by lifting their debt burden.

Mr Brown, who chairs the IMFC, a group of 20 of the world's richest nations, said 15 countries had so far pledged support for the under-funded HIPC initiative.

Development goals

But critics, such as Oxfam, said that while they welcomed the additional funds, the hundreds of millions of dollars pledged so far and the billion-dollar goal itself fell short of what was needed.

imf protester
Activists called the deal a patch-up job
"This is another PR patch-up job on a failing initiative," said Oxfam spokeswoman Julia Tilford.

"Far more radical action is urgently needed to deliver the deeper debt relief needed by poor countries to get them on track to meet the [United Nations] Millennium Development goals," Ms Tilford told BBC News Online.

The development goals, for which the UN has set 2015 as a target date for completion, include halving poverty and hunger, reducing child mortality and providing universal primary education for all the world's children.

Nonetheless, Mr Brown regarded the pledges as an achievement, and said: "A few weeks ago people said it was impossible for us to reach agreement on getting extra money for the trust fund here at Washington".

Risks and uncertainties

The IMFC meeting took place amid the annual meetings of the International Monetary Fund (IMF) and World Bank, which have focused heavily on the state of the world's weary economy.

On that issue, the IMFC reiterated the much-uttered view of late that the global economy is on the mend, albeit at a much slower pace.

"There remain downside risks and uncertainties... underscoring the need for vigilance," the IMFC said in its statement.

The group said reforms under way in the US to strengthen investor confidence were key, and called on Europe to reform its labour and product markets.

It also said Japan must pursue "vigorous" corporate and banking restructuring.

Hundreds arrested

On trade, Mr Brown said the IMFC agreed on the need for urgent action to open up markets and reducing trade subsidies.

"Today we are setting a common course of action," he said.

Industrialised nations have come under heavy fire from international finance organisations for imposing stiff tariffs on goods poor nations have the potential to produce.

It is the opening up of markets, known as globalisation, that has drawn demonstrators to Washington this weekend to protest against IMF and World Bank policies.

While massing in smaller numbers than during previous meetings of world leaders, protesters nonetheless made their presence known, resulting in hundreds of arrests.

Activists generally believe the policies of the two Bretton Woods institutions, as the World Bank and IMF are also known, do more to impoverish countries then to enrich them.

Developing countries

World economy
See also:

28 Sep 02 | Americas
27 Sep 02 | Americas
28 Sep 02 | Business
27 Sep 02 | Americas
27 Sep 02 | Business
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