The world’s leading industrial nations on Friday night agreed to suspend debt payments from countries in south-east Asia affected by the tsunami disaster.
Responding to the damage caused by the wave, the G7 nations announced an immediate debt moratorium and promised further assistance when they meet in London next month.
The deal agreed by the United States, Britain, Germany, Japan, France, Italy and Canada will be rubber-stamped by the Paris club of creditors when it meets next Wednesday. Most debts are owed to the G7 countries, making Paris club approval a formality.
Negotiations have been taking place between G7 capitals all week, and on Friday night the British Chancellor of the Exchequer Gordon Brown, the current chairperson of the group, said debt relief would form merely the first stage of help for countries in the region.
The World Bank and the International Monetary Fund have been told to complete a needs assessment in time for a meeting of G7 finance ministers due to take place in London early next month.
The Washington-based institutions are likely to conclude that billions of pounds will be needed to finance the reconstruction of coastal regions, posing acute short-term financial problems for the countries affected.
The chancellor said on Friday night: “In the wake of this tragedy, the true test of the international community will be how we can fund and assist both the immediate day-to-day emergency services needs but also the long-term reconstruction of the countries affected by the tsunami.
“We must ensure that those countries are not prevented from paying for essential reconstruction because they are having to fund the servicing of their debts. So, for afflicted countries that request it, the G7 is proposing an immediate suspension of debt repayments.
“And depending on the conclusions of the needs assessments, I believe that the G7 and Paris Club must also stand ready to consider all options for further assistance. I will be discussing this with my G7 colleagues at our next meeting on February 4-5.”
The G7 also called on the IMF, World Bank, Asian Development Bank and other multilateral institutions to make the strongest possible efforts to provide financial assistance to the tsunami-affected countries, including providing emergency post-disaster facilities.
The G7 also supported urgent consideration of an early warning system for tsunamis in the Indian Ocean, and for the infrastructure needed to make it effective.
Of those countries affected by the tsunami, Sri Lanka faces the most pressing financial difficulties. It is running a budget deficit close to 10% of GDP, is heavily reliant on tourism and faces the prospect of its textile sector being undercut by Chinese competition following the scrapping on January 1 of the international agreement which gave it preferential access to western markets.
Britain is calling for Sri Lanka to be added to the list of heavily indebted poor countries (HIPCs), most of which are in sub-Saharan Africa.
Number of SA missing drops to five
One of six South Africans feared dead in the tsunami is alive and well, the Department of Foreign Affairs said on Saturday.
The man contacted his brother on Friday evening to say that he was safe, a spokesperson said.
“He just said that he was okay and had been injured. The brother told us the line had been bad so we do not know the exact circumstances, but he’s alive,” the spokesperson said.
The number of missing South Africans now stands at five.
A total of 364 South Africans remained unaccounted for on Saturday.
The figure dropped from 474 on Friday as people who had been in the area at the time of the disaster alerted the department that they were unharmed.
The number of confirmed deaths in Thailand remains at ten.
The 10th fatality was confirmed on Thursday when family members identified a victim at a morgue in Thailand. He was identified by the media on Friday as Avadya Berman (31). – Guardian Unlimited Â