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Thursday, March 18, 1999 Published at 18:06 GMT

Business: The Economy

Tackling Third World debt

U2 singer Bono with boxer Muhammad Ali: "End the debt"

The thorny issue of Third World debt is being discussed in a meeting in London between the World Bank (WB), International Monetary Fund (IMF) and finance leaders from Third World countries.

Ann Pettifor: "We're calling for conditions to ensure the money is well-used"
An agreement is not expected to be reached on what Chancellor of the Exchequer Gordon Brown has called "the great moral issue of our day".

The UK recently launched a campaign to tackle the poverty which cripples the economies of many developing countries.

Jubilee 2000 is the pressure group campaigning to cancel the unpayable debts of the world's poorest countries. It says it makes economic sense to write off their bad debt.

[ image: Jubilee 2000: Loss of
Jubilee 2000: Loss of "precious resources"
Director Ann Pettifor says the move would benefit countries who live "under an overhang of debt", which discourages investment and inhibits development.

"In our campaign, we're calling for conditions to ensure the money is well-used. There are ways in which it is possible to allow sovereign governments to reorder their books," she said.

She stressed that wiping out the debt would be a two-way benefit, although the Third World countries were still her main concern.

"Africa has been one of Britain's trading partners," she said. "But it's not possible to trade effectively with a country which is unable to pay its debts and is diverting precious resources into unproductive debt surplus."

Celebrity cause

Celebrities lent their support to the cause recently when U2 singer Bono, boxing legend Muhammad Ali and The Prodigy's Keith Flint raised awareness at the Brit Awards in London.

Mr Flint had "Drop the Debt" tattooed on his back.

Support has also been shown by several G7 countries which are keen on the idea of improving the Highly Indebted Poor Countries initiative, launched by the IMF and WB in 1996.

It offers countries write-offs of up to 80% of their debt but with strict conditions and only after a lengthy period of IMF programmes and financial "good behaviour".

UK support

Earlier this month, Mr Brown, set out a plan to restructure debt and increase aid from the industrialised countries and international charities.

He said the aim was to reduce the overall indebtedness of developing states by $50,000,000,000 by the end of next year.

He also proposed the sale of gold reserves held by the IMF and the WB to a value of $1bn, to be allocated in the form of debt relief for the poorest developing countries.

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