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Last Updated: Monday, 26 September 2005, 05:26 GMT 06:26 UK
World Bank and IMF back debt deal
Children wait for food distribution in the village in Niger
Niger is among 18 poor nations that would benefit from the deal
World Bank and International Monetary Fund officials have backed a deal to cancel about $55bn (31bn) of debts owed by the world's poorest countries.

The lenders' decision endorses an initial agreement by the leaders of the G8 industrialised states at their July summit in Gleneagles, Scotland.

World Bank head Paul Wolfowitz said the focus and effort must now shift to forging a global free-trade deal.

Trade talks have stalled and officials will try to revive them in December.

The World Trade Organisation will meet in Hong Kong and try to breathe new life into the Doha round of talks that fell apart amid differences over agricultural subsidies.

"The momentum we now have must be maintained heading into the WTO negotiations in Hong Kong," Mr Wolfowitz told a news conference.

"A trade agreement in Hong Kong would provide the spur for investment and economic growth that promises a lasting exit from poverty for millions, even billions, of people in developing countries," he continued.

"We have agreement on more aid, we have consensus on debt relief - now let's complete the picture and deliver a true development round on trade."

'Successful conclusion'

The World Bank gave its blessing to the debt relief deal late on Sunday, at the end of the lender's annual series of meetings with the IMF in Washington.

COUNTRIES TO BENEFIT
Benin, Bolivia, Burkina Faso, Ethiopia, Ghana, Guyana, Honduras, Madagascar, Mali, Mauritania, Mozambique, Nicaragua, Niger, Rwanda, Senegal, Tanzania, Uganda, Zambia

The IMF had already given its backing, and the two international lenders will now ask their executive boards to rubber stamp the agreement.

US Treasury Secretary John Snow said the World Bank's development committee had "strongly endorsed the proposal for 100% cancellation" of debts.

"We expect the executive boards of the IMF and World Bank to swiftly give final approval and move on to implementing it," he said.

Eighteen nations stand to have $40bn in debt written off initially, while $55bn could be released eventually, UK Chancellor Gordon Mr Brown said.

More action

A number of countries, led by Belgium and the Netherlands, had complained that not enough money was being committed by rich nations to make up for the shortfall in funds that the World Bank would face if debt repayments were forgiven.

But a joint-pledge by the G8 on Friday not to dilute the resources of the international financial institutions overcame opposition and the debtor nations could start benefiting by the end of 2005.

The debt issue explored

About 70% of the debt is owed to the World Bank, while the rest is owed to the IMF and the African Development Bank.

Campaign groups had earlier welcomed the IMF's decision, but said the G8's proposals needed to be widened to include more poorer nations.

"This announcement brings a welcome sigh of relief, but the deal still needs to be expanded to include more countries and to eliminate harmful strings attached," ActionAid said.

The debt deal reached in Scotland is regarded as a crucial step towards meeting the United Nations' millennium development goals of halving the number of people living in extreme poverty by 2015.

It was backed by Britain, Canada, France, Germany, Italy, Japan, Russia and the US.


SEE ALSO:
IMF committee backs debt erasure
25 Sep 05 |  Business
World Bank hopes on debt relief
22 Sep 05 |  Business
Have we made poverty history?
16 Sep 05 |  Business
Poverty targets 'will not be met'
09 Sep 05 |  Scotland
Government defends G8 aid boost
09 Jul 05 |  Business


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