LONDON — Building on an accord between Britain and the United States, finance ministers of the world's wealthiest nations agreed Saturday to wipe out $40 billion in debt owed by 18 of the world's poorest countries as part of a major assault on global poverty.
The decision by the Group of 8, the world's leading industrial nations and Russia, fulfilled a decades-old dream of anti-poverty activists, who have argued that payments on old loans drain the limited resources of the world's poorest nations, most of which are in Africa, keeping millions of people mired in poverty.
British Chancellor of the Exchequer Gordon Brown, the major force in putting together the debt-relief package, announced that the poor nations' debt to the World Bank, the African Development Bank and the International Monetary Fund would be wiped out. Richer countries have agreed to replenish the reserves of the funding organizations as necessary.
Brown said the debtor nations would be relieved of $15.6 billion in payments on the $40 billion over the next 10 years, and the savings would be funneled to urgent needs in health, education and infrastructure development.
The decision qualifies 14 countries in Africa and four in Latin America for immediate debt forgiveness. An additional 20 countries could qualify over the next two years. Brown said the total size of the debt relief package could eventually reach $55 billion, believed to be the largest such initiative in history.
U.S. Treasury Secretary John W. Snow, who was in London for the finance ministers' meeting at a conference center near Westminster Abbey, hailed it as "an achievement of historic proportions."
Although some African countries that will not immediately benefit questioned the value of the agreement, a spokesman for South African President Thabo Mbeki declared the agreement "good news" for the continent.
"We are really encouraged by this decision and want to thank the British government and all the countries involved in this agreement," said the spokesman, Bhelo Khumalo. "It will go a long way to enriching the African continent."
The action by the finance ministers was spearheaded by Britain as part of a drive by Brown and Prime Minister Tony Blair to aid Africa and help fulfill United Nations goals to cut world poverty in half by the year 2015. Many parts of the world have made progress in recent decades, but people in many sub-Saharan countries are poorer than they were decades ago and are dying younger.
Brown said that the G-8 summit scheduled to begin July 6 in Gleneagles, Scotland, could see additional anti-poverty commitments from the assembled leaders of Britain, the United States, Canada, France, Italy, Germany, Japan and Russia. Among those initiatives could be guaranteed treatment for people with HIV/AIDS by 2010.
"I know it is the intention of world leaders to forge a new and better relationship -- a new deal -- between the rich and poor countries of the world and I believe that the advances that we have made can be built upon ... in the next few weeks," Brown said. "This is not a time for timidity, but a time for boldness, and not a time for settling for second best, but aiming high."
The deal was seen as a victory for Brown, who in recent months has held long, tough talks with fellow finance ministers to gain support for his debt-relief proposal.
In a crucial breakthrough last week, the U.S. and British governments agreed that the debts could be forgiven and the international community would make up the funds that would be lost to the World Bank and the other lending organizations. Britain had originally proposed that richer countries assume the debt payments.
Blair pushed President Bush for action in a meeting in Washington last week. British officials reported on Friday that the White House made a significant concession, agreeing that money used to reimburse the lending institutions would not come out of future aid to the poor countries.
Over the next 10 years, the additional cost to the United States would be $1.3 billion to $1.75 billion. Britain would pay $700 million to $960 million, Brown said.
Writing off the multilateral debts of poor countries has been one of Britain's priorities for its G-8 presidency, which starts next month.
It is also pressing for a doubling of foreign aid levels and for the creation of an international finance facility that would issue bonds based on long-term foreign aid commitments, and use the money to pay for vaccinations and infrastructure development in Africa.
Loans from international lending agencies are only part of the debt owed by the world's poorest countries but are the most burdensome. The G-8 countries already have committed to completely forgive debt owed directly to them by the world's poorest countries, and for some of the poor countries, the debt is already in the process of being canceled.
However, repaying debt to international lending agencies has been a condition for poor countries seeking access to credit markets.