G8 debt deal still not secure
30 August 2005The deal for further debt cancellation agreed at the G8 summit in July 2005 is still not secure. It needs agreement by the World Bank and IMF - but some countries involved in these institutions are raising objections to the proposal.
The deal proposed by the G7 Finance Ministers in June and subsequently adopted by G8 leaders in July would offer 100% cancellation of World Bank, IMF and African Development Bank debts for the countries which have completed the current international debt relief scheme (18 at present). Click here for more details of the proposal. The parts of the deal which are least secure are:
- Financing. It is not completely clear that the deal would be implemented in a way that will genuinely give additional funds to poor countries, or will in some cases simply re-allocate aid money. Some countries which are already contributing large amoutns of their budgets to aid are asking the G8 for assurances that they will actually put in their fair share of additional funding.
- Conditions. Some countries are trying to change the deal from full, upfront debt cancellation - which was promised by the G8 - into a year-by-year debt service relief, dependent on conditions. Jubilee Debt Campaign entirely opposes this proposal, which would remove all the benefits of upfront debt cancellation and allow the cancellation to be suspended at any point, and instead give rich countries even more power over poor countries' decisions.
- Allocation. Some creditor countries are concerned that the benefits will only go to poor countries that have large debts, rather than all those that need it. Jubilee Debt Campaign is calling for cancellation of ALL unfair and unpayable debts (not just for those countries that qualify for this proposal) and additional grant financing for all countries that need it.