Rich world fails campaigners' challenges on debt and gold

At this weekend's meetings of the G7 Finance Ministers, the International Monetary Fund and the World Bank, rich governments have again failed to agree to debt cancellation for poor countries, in fact offering even less than at the last G7 Finance Ministers' meeting in London in January.

The statement issued by the Finance Ministers of the G7 (the seven richest and most powerful countries - Canada, France, Germany, Italy, Japan, the UK and the US) repeated February's declaration of a "willingness to provide as much as 100%" debt relief for countries inside the Heavily Indebted Poor Countries (HIPC) initiative. But yet again they have failed to act on this claimed willingness.

Which debts?
The new G7 statement explicitly referred only to debts these countries are paying to the World Bank and the African Development Bank, while February's statement referred more broadly to "multilateral debt". The exclusion of debts being paid to the International Monetary Fund (IMF) is worrying. The US Treasury Secretary John Snow also issued a separate statement, which said the US is "not persuaded by arguments for IMF debt relief". HIPC countries are currently paying debt service to the IMF on debts totalling about $7 billion.

IMF gold
On the issue of using the IMF's huge and undervalued gold reserves to fund debt relief, as campaigners have been demanding, the G7 ministers simply 'thanked' the IMF for its paper on the topic. The IMF committee meeting called for "further discussion". The paper produced by IMF staff ahead of these meetings had made clear that gold sales are feasible, and would not affect the world gold market. Impoverished gold-producing countries such as South Africa and Tanzania have also called for IMF gold to be sold to finance debt relief.

Paying for debt cancellation
The G7 statement said that debt relief should be delivered "without reducing the resources available to the poorest countries". In the press conference after the IMF meeting, UK Chancellor Gordon Brown also stated very firmly that all countries were agreed that additional resources had to be found to finance debt cancellation. Jubilee Debt Campaign, as well as campaigners in indebted countries, had been concerned at US proposals for 100% cancellation of debts being paid to the World Bank, with the resulting shortfall in funding to the Bank being covered by reducing its aid payments to poor countries by exactly the same amount as the cancelled debts. But as African organisations said in a statement in March 2005, "any debt relief initiatives should ensure additional... financial flows to these countries". Gordon Brown said that he expected "specific sums" to finance debt relief to be put on the table at the G8 summit in Scotland in July - and Jubilee Debt Campaign will hold him to that undertaking.

Which countries?
Whereas the G7 statement in February raised the issue of debts in low-income countries outside the HIPC initiative, the April statement only referred to HIPC. Jubilee Debt Campaign joins other campaigns worldwide in insisting that debt cancellation be agreed for all impoverished countries that need it. Many poor countries, such as Bangladesh and Nigeria, are forced to spend huge amounts servicing external debts but are not included within HIPC. The statement also indicated that decisions debt relief of up to 100% should be based on a "case by case analysis". Jubilee Debt Campaign has argued that there is already sufficient evidence of the need for 100% debt relief for many poor countries, and that 100% debt relief should be agreed now.

Campaigner action
Campaigners in Washington restarted the clock set up in London in February when the G7 finance ministers last met, showing the number of children dying unnecessarily because of poverty. Since the London meeting in February a further two million children have died. The next focus for further action will be World Debt Day on May 16th: seven years after the human chain welcomed the G8 to Birmingham, seven weeks before the G8 returns to the UK for the first time since then.