G7 adopts sweeping debt relief package

OWN CORRESPONDENT and Reuters, Cologne | Sunday 12noon

THE Group of Seven (G7) industrial nations on Friday adopted a sweeping $71-billion debt relief package for the world’s poorest nations.

Leaders said they were effectively writing off one-third of the poorest countries’ total debt, estimated at $230-billion.“We support faster, deeper and broader debt relief for the poorest countries that demonstrate a commitment to reform and poverty alleviation,” the G7 said in a statement.

As part of the deal, French President Jacques Chirac on Friday said Paris was cancelling $6-billion worth of debt owed by Africa’s poorest nations. The move will “cancel all debt owed to France by Africa’s poorest nations,” Chirac told a news conference. The G7 debt reduction measures represented an “intelligent, generous and courageous” move, the French President said.
“We want countries to benefit rapidly.”

“We will be writing off literally billions of dollars worth of debt,” said British Prime Minister Tony Blair, adding: “I believe this summit will mark probably the biggest step forward in debt relief.”

G7 finance ministers agreed in Frankfurt last weekend to sell 10-million ounces in gold held by the International Monetary Fund to pay for debt relief.

The move represents a major policy shift by Germany which has long opposed the sale of IMF gold. But critics say that by provoking a decline in gold prices, the sale could cause more harm than good to indebted nations which are also gold producers. Under the G7 plan, the number of countries eligible for debt reduction rises to 36 from 29 at the moment.

Leaders agreed to reduce ratios of external debt to exports to 150% from 200% under the current arrangement. There was also an accord on the target for debt-to-government revenue from 280% to 250%.

“These combined revisions will result in deeper debt forgiveness, take greater account of debtor countries’ fiscal positions and broaden the initiative to more countries,” the G7 report said.

ATES AT A GLANCE

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