G7 vows to share poor nations8217; burden

COLOGNE, JUNE 19: The world's seven richest nations have waived an estimated 70 billion dollars worth of debt held by the poorest countri...

COLOGNE, JUNE 19: The world8217;s seven richest nations have waived an estimated 70 billion dollars worth of debt held by the poorest countries in a historic initiative to ease their crushing debt burden and free their scarce resources for priority social spending projects.

8220;One of the most critical challenges confronting the international community as we approach the new millennium is to ensure that heavily indebted poor countries pursuing sound policies, and that demonstrate a commitment to reform and poverty alleviation, are not crippled by the burden of debt,8221; said a G7 communique on the world economic situation.

The group of seven industrialised countries launched the Cologne Debt Initiative8217; at their annual economic summit here last night to provide 8220;faster, deeper and broader8221; reduction of foreign debt owed by 36 of the world8217;s 41 poorest countries.

A few countries are being excluded for reduction in debt service burdens due to human rights or political problems.

The 41 poorest countriescollectively owe a staggering 220 billion dollar and account for about eight per cent of the 2.5 trillion dollar owed by all 160 developing countries. The Cologne Initiative8217; increases the number of nations eligible for debt relief from 29 to 36 and reduces the time period from six to three years for adhering to an IMF reform and austerity plan to qualify for the debt relief.

Shortly before the debt package was announced, British Prime Minister Tony Blair said 8220;we will be writing off literally billions of dollars worth of debt.8221;

8220;I believe this summit will mark probably the single biggest step forward in debt relief and help to the poorest countries that we have seen in the international community for years,8221; Blair said after his bilateral meeting with US President Bill Clinton on the sidelines of the summit. Besides hosts Germany, the other G7 members are the US, Canada, the United Kingdom, France, Italy and Japan. The G7 leaders also asked the Paris Club and other bilateral creditors to forgivecommercial debt up to 90 per cent and more in individual cases, if needed to achieve debt sustainability, in particular for the very poorest among these countries.

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Japan, which is the world8217;s largest bilateral donor of official development assistance ODA of about 11 billion dollars, while welcoming the initiative said the debt relief was 8220;half of the solution to the problem8221;.

Japanese government spokesman Sadaaki Numata said there could be a lasting solution only if there was a continuous and strong efforts of policy reform and structural adjustment by the indebted countries. Japan also wants a 8220;fair burden sharing8221; of debt relief, he said.

US National Security Adviser Sandy Berger said the debt relief actions were 8220;really historic8221; and would have an impact on the poorer countries in the developing world, perhaps more than any other single action taken by the developed countries at any time.

8220;This debt relief8217; is not a moral issue,8221; said a British official, adding it was in the developedworld8217;s interest to end the marginalisation of the world8217;s poorest and indebted countries. It is disturbing, he pointed out, that countries are spending ten per cent of their budgets on health and education and 60 per cent on debt servicing.