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Last Updated: Saturday, 11 June, 2005, 07:08 GMT 08:08 UK
Pressure for Africa poverty deal
By Steve Schifferes
BBC News economics reporter at the G7 finance ministers meeting

Claudia Schiffer at Global Campaign Against Poverty press rally
High-profile celebrities are backing the poverty campaigners at the G8
Finance ministers from the world's richest countries have gathered in London in an attempt to agree a debt relief deal to help Africa's poor.

The talks come just a month before world leaders - and thousands of anti-poverty campaigners - converge at Gleneagles for a G8 summit.

Britain has vowed to make poverty reduction a key plank of the summit.

Its plans got a boost as the White House confirmed the US and UK had agreed on how to implement debt cuts.

Germany, France and Japan are believed to be doubtful about a total debt write-off for poor countries so having US support may help UK Chancellor Gordon Brown win them over.

Mr Brown welcomed the eight finance ministers, who were joined by the new World Bank President Paul Wolfowitz, and EU economic affairs commissioner Joaquin Almunia, to a working dinner at Lancaster House.

The debt issue explored

Mr Brown expressed optimism that a debt deal would be done, saying that there was the "political will of the richest countries to move forward," and promising that it would be "the biggest debt settlement the world has ever seen".

But the German Finance Minister, Hans Eichel, said he thought there would be no deal until Gleneagles.

"We will not come to an agreement here," he said. "What I see as very important is that we stick with the case-by-case approach on debt relief for every single country."

Debt deal?

The finance ministers spent Friday discussing the outline plan from the UK and US to write off the debts of 18 highly-indebted countries in Africa, according to White House spokesman Scott McCellan.

Children in Sierra Leone

Full details of the plan were not available.

Mr McCellan said it would "cancel 100% of the World Bank, African Development Bank and IMF debt" - suggesting the US may have dropped objections to including IMF debts.

Funding the plan remains controversial. The US has previously said any debt relief from the World Bank should come out of funds the organisation uses to lend to poor countries.

Mr McCellan said debt would only be cancelled only for countries that showed a commitment to "sound economic policies" and reducing corruption.

Anti-poverty campaigners are concerned that only 27 poor countries have qualified for debt relief and would benefit from any initiative. They argue that 62 countries, including large debtors like Nigeria and Indonesia, should be included.

"There is only a 60% chance of a deal on debt relief, it is no means certain, and on aid we don't expect very much at all which is very disappointing," said Romilly Greenhill, policy officer at ActionAid.

Germany, France and Japan have proposed that the rich countries shoulder the costs of servicing poor nations debt, rather than write off the debts entirely.

However, Canada, which had earlier backed these plans, now appears to moving to support a complete write-off.

Disagreements among the rich

The finance ministers are hoping to resolve deep-seated disagreements over key proposals to boost aid to Africa, as well as cutting debt.

Despite a personal plea from Tony Blair, the US is unlikely to support a doubling in aid flows to poor countries to help them meet UN targets on poverty reduction.

The UK plan for an International Financing Facility, which would issue $50bn in bonds against future aid flows, is now likely to proceed only on a limited basis, perhaps supported by other EU countries but not by the US or Japan - the world's two biggest economies.

Nor does the US favour a French proposal to tax international airline travel to fund additional aid flows.

Public pressure

The development lobby, which is organising mass demonstrations during the summit, wants finance ministers to agree debt relief for all poor countries, back calls to double aid to $100bn a year, and reform the world trading system.

Campaigners said that growing pressure from the public was beginning to tell on governments.

African leaders generally welcomed the prospect of a deal.

Finance Minister Kwadwo Baah-Wiredu of Ghana, which would benefit from debt relief, said on Friday that African leaders must live up to their part of the deal in ensuring that the money from debt relief is spent wisely.

"We need to reinvest well enough whatever we get from it," he said.

A spokesman for Ugandan President Yoweri Museveni said debt was "killing" small countries.

He added: "On the one hand of course, we are grateful this is being done but we do get these things said all the time and, number one, sometimes the money doesn't turn up and if it does turn up it is late."

The G8 countries are United States, Canada, Britain, France, Germany, Italy, Japan and Russia.

The 27 countries who are eligible for debt relief under the HIPC (highly-indebted poor countries initiative) and the 18 who have reached completion point in bold: Benin, Bolivia, Burkina Faso, Cameroon, Chad, Democratic Republic of Congo, Ethiopia, Gambia, Ghana, Guinea, Guinea Bissau, Guyana, Honduras, Madagascar, Malawi, Mali, Mauritania, Mozambique, Nicaragua, Niger, Rwanda, Sao Tome Principe, Senegal, Sierra Leone, Tanzania, Uganda, and Zambia.

The 11 countries who theoretically qualify for debt relief but have not been allowed to join so far are: Angola, Burundi, Central African Republic, Ivory Coast, Comoros, Congo, Liberia, Mynamar, Somalia, Sudan, Togo.

Jubilee Debt Campaign argue that the figures show that another 24 countries qualify as needing full debt relief if they are to have the resources necessary to meet the Millennium Development Goals: Azerbaijan, Bangladesh, Cambodia, Equatorial Guinea, Eritrea, Georgia, Haiti, India, Indonesia, Kenya, Korea, Kyrgyz Republic, Lesotho, Nepal, Moldova, Nigeria, Pakistan, Sri Lanka, Tajikistan, Uzbekistan, Vanuatu, Vietnam, Yemen and Zimbabwe.




BBC NEWS: VIDEO AND AUDIO
Gordon Brown on his hope for a breakthrough on debt



SEE ALSO:
Q&A: African debt relief
10 Jun 05 |  Business


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