Their final communique after a finance minister meeting in London on Saturday said the cost of covering IMF debt should be met from existing IMF resources and they had agreed to 100% debt relief for 18 countries.
British Finance Minister Gordon Brown told a news conference that G8 had agreed to write off debt for the world’s poorest countries.
Brown said $40 billion would be available immediately to cancel the debt of the impoverished nations.
According to the most recent World Bank figures, Sub-Saharan Africa’s total external debt was $231 billion in 2003. Of that, 30%, or $69 billion, was owed to multilateral lenders, such as the World Bank and International Monetary Fund.
The G8 comprises Britain, Japan, Canada, the United States, France, Italy, Germany and Russia.
Britain, chairing the club of rich nations this year, was determined to seal an accord on debt relief and aid for the impoverished African continent by the time G8 leaders meet in Gleneagles, Scotland, next month.
Germany wanted debt relief to be considered on a case-by-case basis, and argued that countries would have to show they were deserving by improving governance and clamping down on corruption. Japan said blanket forgiveness would create moral hazard.
The finance ministers were also taking stock of their own economic problems on Saturday morning, such as slow growth in Europe and Japan, record deficits in the US and tension over China’s currency policy.
Africa stands to benefit most
US Treasury Secretary John Snow urged his Chinese counterpart Jin Renqing to scrap the yuan’s exchange rate peg to the dollar. He met Jin on Friday, but the appeal is unlikely to spark any rapid action.
Britain’s Chancellor of the Exchequer Gordon Brown said each continent had to play its part in fostering growth as the world faced the challenge of sky-high oil prices.
“We will be looking at how Europe can do more economic structural reform. America can deal with the issues they know they have to deal with – their twin deficits, Japan and its financial sector reform.”
Officials said they expected no change in the rich countries’ stance on foreign exchange markets, and ministers are likely to repeat their call for greater flexibility in exchange rates.
Focus on Africa
Charities said no deal would cover all the 62 countries they said needed their debts cancelled for any hope of achieving UN targets of halving world poverty.
“We certainly see it as a step forward; but according to our analysis, it still would provide 10% of the debt relief that is needed to significantly reduce poverty by 2015,” Romilly Greenhill of ActionAid said on Thursday.
“We will be looking at how Europe can do
Of the 18 countries benefiting from quick relief from any deal concluded at Gleneagles, 14 will be from sub-Saharan Africa, where millions die each year from disease and poverty.
British Treasury officials said a further nine impoverished countries could qualify for assistance within 12 to 18 months and there were potentially 38, mostly African, nations that might benefit, for total debt relief of $55 billion.
But Britain’s other main proposal – doubling aid to Africa – looked unlikely to make any progress at this meeting and would probably be pushed back to Gleneagles.
Pop star Bob Geldof and others are urging a million people to turn up in Scotland next month to demand a deal on debt relief and aid for Africa.