EU hoping for debt relief pact

EU finance ministers hope the world's major financial institutions will agree to cancel the debt of developing nations this month, Britain's finance minister Gordon Brown has said.

    Gordon Brown called for a global response to high oil prices

    "We are hoping that at the annual meetings in a few days time all the shareholders of the International Monetary Fund and the World Bank will be able to vote on a debt relief package that will wipe out the stock of debt of the poorest countries," he said on Saturday.

    Speaking at the end of two days of informal talks with his EU counterparts in Manchester, northern England, Brown said that the ministers were trying to put in place a financing mechanism to help that process.

    "We've made very considerable progress today on a number of these issues," he said. "These decisions that we made today will inform the final framework" of the IMF and World Bank, which meet at the end of September.

    Britain, which currently holds the EU's rotating presidency, has made debt relief and the support of developing nations, particularly in Africa, a major goal of its six-month term.

    Global response to oil prices

    EU finance ministers at the meeting also called for a global response to high oil prices, urging producers to invest in future supplies and warning of the risks to economic growth.

    "Global problems require global solutions"

    Gordon Brown,
    Britain's finance minister

    "Global problems require global solutions," Brown said.

    He said the ministers had agreed that the dialogue between major oil producing countries and those that consume it needed to be strengthened in order to increase oil supplies.

    The EU is engaged in dialogue with Russia, Norway and the Opec group of producer nations, and Brown said he spoke to the Saudi Arabian finance minister about developments early on Saturday, but gave no details.

    The ministers called on oil producing countries to invest revenues from the price rise in new capacity, and urged oil companies to increase investment in oil exploration, production, refining capacity and alternative energy sources.

    Efficiency and savings

    They also emphasised the need for increased energy efficiency and energy savings and for efforts to improve the transparency of oil markets, particularly through increased reporting of oil reserves.

    Brown said demand for oil will continue to grow strongly over the next two decades, making the investment in new capacity essential.

    EU ministers urged producers to
    invest in exploration and refining

    "Ministers emphasise their continuous effective coordination in reaction to rising oil prices and agree that distortionary fiscal and other policy interventions preventing the necessary adjustments should be avoided," the EU ministers said in a statement.

    They said they "welcome the absence of underlying inflationary pressures and stress the need to avoid second round effects".

    No consumer assistance

    The chairman of the 12 nations using the single currency - the so-called Eurogroup - Jean-Claude Juncker said on Friday that the ministers were not inclined to support cuts in excise and sales taxes to ease the burden on consumers.

    World oil prices rose again on Friday amid renewed supply concerns after data revealed severe disruptions to production after Hurricane Katrina caused widespread damage to oil rigs in the Gulf of Mexico and refineries in the southern United States.

    Prices hovered between $63 and $65 a barrel in London and New York.

    The price of crude oil surged to a new record of $70.85 per barrel in New York last week.



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