British government proposes paying off portion of poor nations’ debt Associated Press

deseretnews.com
Monday, September 27, 2004

BRIGHTON, England — Britain will provide more debt relief for the
world’s poorest countries and challenge other rich governments to do
the same, Prime Minister Tony Blair’s government said Sunday.

Treasury chief Gordon Brown said many developing countries were
crippled by servicing their debt and could not invest in their
infrastructure.

“We will pay our share of the multilateral debt repayments of reforming
low-income countries,” Brown said in a statement, released by the
Department of International Development.

“We will make payments in their stead to the World Bank and African
Development Bank for the portion that relates to Britain’s share
of this debt. We do this alone today but I urge other countries to
follow so that over-indebted countries are relieved of the burden of
servicing all unpayable multilateral debt.”

Britain holds about 10 percent of the total debt owed to the World
Bank and other development banks, or about 7 percent of all the debt
of the world’s poorest nations.

Britain’s Treasury said it had earmarked 100 million pounds ($180
million) per year until 2015 to pay for the initiative.

In a speech to a “Vote for Trade Justice” event at a church in
Brighton, the coastal town where the governing Labour Party is holding
its annual conference, Brown said it was vital to remove damaging
trade barriers, and invest in poor countries so they had the capacity
to trade.

He stressed the need to reform the European Union common agricultural
policy which distorts the global market for farm goods, saying
“we can and must do more to urgently tackle the scandal and waste”
of the subsidies.

Brown told the audience he would urge other countries to back his
proposal for an International Finance Facility through which donors
from richer nations would raise funds on the international markets,
when he attends the annual meetings of the International Monetary
Fund and World Bank.

He also called for debt payments owed to the IMF to be funded through
the more efficient use of IMF gold reserves.

Britain’s Development Secretary Hilary Benn said poor countries needed
“significant additional resources” to “lift people out of poverty,
get children into primary schools and improve basic health.”

“Debt relief is an efficient way of transferring these resources
to countries that can use them most effectively,” he said in
the statement. “We call on other governments, especially our G-8
partners, to join us so that no country is held back by the burden
of unsustainable debt.”

To be eligible for the debt relief, countries must be able to show
the savings will be used to meet the goals of the 2000 Millennium
Summit. Those goals include halving the number of people living in
dire poverty from 2000 levels; ensuring that all children have an
elementary school education; ensuring that all families have clean
water; and halting the AIDS epidemic — all by 2015.

The list of countries will include those that have been through
the Heavily Indebted Poor Countries Initiative: Benin, Bolivia,
Burkina Faso, Ethiopia, Ghana, Guyana, Mali, Mauritania, Mozambique,
Nicaragua, Niger, Senegal, Tanzania, Uganda, as well as a number of
other countries such as Vietnam and Armenia, where the World Bank has
assessed the countries are capable of absorbing direct budget support,
the statement said.

Fair trade campaigners praised Brown’s initiative.

“It is an incredibly bold step,” said Brendan Cox of Oxfam. “This
really piles pressure on the United States, France, Japan, Germany,
Canada and other countries. If he can get the other countries to
follow suit this really is the end of the debt crisis as we know it.”