Sociedad Bastiat

lunes, junio 13, 2005


Sociedad Bastiat

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Received: Sun, 12 Jun 2005 06:38:04 PM CDT
From: "R.E. Calvo"

G8 Unveils Plan to Erase
Debt of Poorest Nations

June 11, 2005 4:10 p.m.

LONDON -- In a strong show of unity for the goal of combating poverty in the developing world, the Group of Eight industrial powers agreed to erase the debts of the world's poorest countries.

The initiative is designed to turn around the fortunes of 38 highly indebted nations, ridding them of payments on $56.5 billion in loans owed to the World Bank, the African Development Bank and the International Monetary Fund. In agreeing to the wealth transfer, the G8 countries hope to free up capital in the developing world for local investments in education, health care, the environment and basic infrastructure such as roads, ports and bridges.

The final agreement was made at a two-day gathering of G8 finance ministers in London.

"A real milestone has been reached," Mr. Snow said. The secretary added the long-term goal of the plan is to end the decades-old "cycle of lend and forgive," which had burdened the developing countries with ever greater amounts of debt and drained their ability to address other needs. "We saw it as morally wrong," Mr. Snow said.

The deal ended more than a year of tense negotiations, and now shifts the focus of preparations for next month's summit of G8 leaders in Gleneagles, Scotland. British Prime Minister Tony Blair, the host of the gathering, is pushing an aggressive antipoverty agenda. He is urging the industrial powers not just to agree to debt relief, but to commit to a sharp increase in direct spending on development assistance, especially for Africa. And with the ink barely dry on the debt plan, international aid groups immediately began pressing the G8 nations to do more of the Blair agenda, launching a lobbying campaign that will culminate with the Gleneagles summit.

As a practical matter, the early stages of the initiative will provide debt cancellation for 18 impoverished nations that have undertaken economic and social reforms designed to improve the governance of their countries. Additional countries will be able to qualify for relief, as they embrace the good-governance reforms.

Under the G8 plan, the payments to the World Bank and African bank will be spread out over three decades or more. By 2015, officials estimate about $8 billion in payments will have been made by the G8 powers, with the U.S. share of that cost ranging from $1.28 billion to $1.75 billion, the largest of any of the seven countries footing the debt-relief bill. In addition to the U.S., Britain, Japan, Canada, France, Germany and Italy are all contributing to the program. The eighth member of the group, Russia, isn't.

A senior Bush administration official said the U.S. contributions to the development banks won't require the approval of Congress, at least in the early years of the program.

Much of the benefit of the debt cancellation will fall on the African continent, with Ethiopia, Burkina Faso and Senegal among the 18 nations in line to gain early assistance. Significantly, the G8 finance ministers also signaled their intention to work with Nigeria to restructure $31 billion in bilateral debt. For various reasons, including Nigeria's vast oil reserves, the troubled African nation doesn't qualify for the cancellation program agreed to over the weekend. Officials said the Nigerian finance minister has lobbied strongly for help.