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G-8 Nations Are Open to Canceling Debts

June 11, 2005|From Associated Press

LONDON — Backed by the United States, Britain pressed the world's economic powerhouses Friday to cancel $15 billion in debts owed by 18 poor nations to free money for improvements in healthcare, education and infrastructure in those struggling lands.

There was some support for the plan at talks among finance ministers from the Group of 8 major industrial nations, but differences remained on how to the finance the loan write-offs.

Britain and the United States want their G-8 partners to support eventual cancellation of 100% of all debts that poor countries owe multilateral institutions such as the World Bank, the International Monetary Fund and the African Development Bank.

The proposal, negotiated this week in Washington by Prime Minister Tony Blair and President Bush, followed a significant concession from the White House that money used to reimburse the lending institutions would not come out of future aid, British officials said.

British finance chief Gordon Brown said Friday that he was optimistic the G-8 nations -- the United States, Britain, Japan, Germany, France, Italy, Canada and Russia -- would approve the cancellation of debts.

Blair and Bush have said they believe the international institutions should simply scrap the debts of poor countries -- totaling as much as $68 billion for nations in sub-Saharan Africa alone -- because the crippling repayments eat up money that could be spent on developing economies and improving peoples' lives.

They say the world's rich nations would provide extra money to the lenders to compensate for the loans and ensure future aid packages were not affected.

Britain has proposed that the IMF revalue or sell some of its gold reserves to raise cash for the plan. Washington, worried about the effect on the gold bullion market, opposes that.

German Finance Minister Hans Eichel predicted that no agreement would come before the G-8 summit July 6-8 in Gleneagles, Scotland.

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