Debt campaigners wanted the IMF and World Bank to go further and cancel 100% of all debts owed to the two organisations, a move the World Bank said would cripple its ability to lend in the future.
The International Monetary Fund (IMF) and World Bank have rejected calls by Canada to have a moratorium on the debt owed by the heavily indebted poor countries.
Speaking in Prague, UK Chancellor Gordon Brown, who chairs the joint IMF/World Bank debt relief committee, said that instead the international institutions planned to speed up debt relief to ensure it is granted to 20 countries by the end of the year.
This move would amount to "achieving the spirit of the proposal made by Canada" he said.
But the decision bitterly disappointed campaigners from around the world who had come to Prague to demonstrate for more debt relief.
Earlier on Sunday, the protesters had held a funeral march through the streets to mourn for the 19,000 children they say are dying each day because of the debt burden on the world's poorest countries.
Curious onlookers and a few conference delegates looked on as the protesters unveiled a huge mock chain around the Old Town Square symbolising the debt burden.
Anne Pettifor, the head of Jubilee 2000 UK, which organised the march, said she was "angry and deeply disappointed" by the latest developments.
"The empty rhetoric on debt relief and poverty reduction rings even more hollow," she said.
International promise
Canada had earlier urged creditor countries to freeze third world debt repayments as part of an international promise on debt relief.
Canadian Finance Minister Paul Martin said: "We made a commitment last year to faster action and we must make good on this commitment."
"We must ask ourselves whether we cannot do more. For example, why should we not consider an immediate moratorium on debt payments from eligible countries?"
Debt campaigners wanted the IMF and World Bank to go further and cancel 100% of all debts owed to the two organisations, a move the World Bank said would cripple its ability to lend in the future.
They argue many poor countries will be no better off after debt relief than they were before, and will still have to repay more money to rich countries than they will be able to spend on health or education.
But UK development secretary Claire Short said that aid agencies like Oxfam were unrealistic if they thought that the debt relief initiative could resolve all the financial problems of poor countries.
Many developing countries say that debt relief still happens too slowly.
The IMF sometimes required a country to fulfil 150 to 200 conditions before receiving any help, Commonwealth finance ministers said.
"Their conditionalities need to be simplified and made more coherent," said Luisa Dias Diogo, finance minister of Mozambique.