[stop-imf] Canada endorses UK approach to debt relief]

[Robert Weissman]

CANADA PROPOSES 100 PER CENT DEBT RELIEF FOR WORLD'S POOREST COUNTRIES


Ottawa, February 2, 2005
2005-008
Related documents:
=95 Backgrounder - Beyond HIPC
=95 Backgrounder - Canada's Aid to Africa
________________________________________
Minister of Finance Ralph Goodale today announced a debt relief proposal
that will ease the burden of debt for the world's poorest countries by
substantially increasing both the amount of relief available and the number
of nations eligible for international debt relief assistance. He also calle=
d
on other donor countries to support this Canadian initiative and provide
similar debt relief for developing nations.
"The Canadian proposal will provide low-income nations with the opportunity
to invest in the future of their people, and not the debt obligations of
their past," said Minister Goodale. "A permanent debt relief solution may
finally be within our reach."
Under this initiative Canada will contribute approximately $172 million ove=
r
the next five years to the International Development Association of the
World Bank and the African Development Fund. This relief will be immediatel=
y
open to the 15 countries that have completed the Heavily Indebted Poor
Countries Initiative, a multilateral debt reduction strategy, as well as 4
other nations participating in the World Bank Poverty Reduction Support
Credit program. A further 37 countries are potentially eligible for
benefits. Strong governance and human rights considerations are built into
this proposal, as is a link to the achievement of the Millennium Developmen=
t
Goals in 2015. This contribution represents 4 per cent of all debt payments
to these institutions, or Canada's traditional share of global multilateral
assistance.
In addition, Canada will consider how best to finance further relief of
debts owed to the International Monetary Fund (IMF) by eligible countries.
Canada calls on donors to agree on the need to provide further IMF debt
relief and to identify the best way to finance this cost.
"Canada's proposal focuses on relieving the immediate burden of debt by
reducing debt-servicing obligations, and provides deeper relief than
existing initiatives by effectively paying 100 per cent of debt-servicing
payments coming due between now and 2015," said Minister Goodale. "Canada i=
s
also willing to explore various options to finance further debt relief
through the IMF. However, if these options negatively affect the Fund's
financial position or disrupt world gold markets, Canada calls upon donor
countries to pay for 100 per cent debt-service relief on IMF claims
directly."
Today's announcement was made in advance of the February 4-5 meetings of th=
e
G-7 Finance Ministers and Central Bank Governors, which is expected to
include further discussions on international debt relief. It also comes in
advance of the final report of the Commission for Africa, created by Britis=
h
Prime Minister Tony Blair to recommend innovative approaches to help Africa
meet its development goals. Minister Goodale is a member of the Commission
for Africa, along with UK Chancellor of the Exchequer Gordon Brown and Sout=
h
African Finance Minister Trevor Manuel.
"While we've seen recent progress in providing debt relief to countries
working to overcome poverty, the debt burdens for these countries are still
far too high," said Minister Goodale. "Debt relief was one of the key issue=
s
raised on my trip last summer to Africa and is clearly a high concern for
Canadians. With this announcement, Canada and other nations can do their
part to help eliminate this hardship by immediately freeing resources that
countries can direct towards poverty reduction."
See the attached backgrounders for more details. Further information on
previous Canadian debt relief can be found in Helping the Poorest - An
Update on Canada's Debt Relief Efforts available on the Department of
Finance Web site.
- 30 -
For further information:
David Gamble
Public Affairs and Operations Division
(613) 996-8080
Pat Breton
Press Secretary
Office of the Minister of Finance
(613) 996-7861
If you would like to receive automatic e-mail notification of all news
releases, please visit the Department of Finance Canada Web site at
http://www.fin.gc.cahttp://www.fin.gc.ca/scripts/register_e.asp.
________________________________________

  Canada


Britain's Debt Relief Push Finds Canadian Ally


Wed February 2, 2005 2:21 PM GMT-05:00
By Ross Finley

LONDON (Reuters) - Britain's plan to rally the world's richest nations to
forgive multilateral debt owed by the poorest got a shot in the arm on
Wednesday from Canada but it is still far from certain a full G7 deal is at
hand.

British finance minister Gordon Brown welcomed the Canadian proposal, which
comes just days before this weekend's meeting of Group of Seven finance
ministers in London and aims to forgive poor nations' debt-servicing
repayments for a decade.

As G7 president this year Britain is seeking to get agreement from all
members on 100 percent multilateral debt relief but Japan, among others, ha=
s
yet to come on board, and U.S. officials have long indicated a preference
for grants.

Canada said it would contribute millions to the World Bank and the African
Development Bank for some 15 heavily-indebted nations in a plan that it sai=
d
would effectively pay 100 percent of debt servicing payments over the next
10 years.

Aid agencies welcomed the Canadian proposal.

"It shows that along with the UK they are trying to take an international
lead on the debt crisis for developing countries," said Sarah Kline, a
policy adviser at Oxfam, which is calling on G7 nations to cancel poor
countries' debts.

"We're looking to them to encourage the rest of the G7 to come on board."

Canada called on other countries to support the initiatives and said it was
willing to explore other options to finance further debt relief through the
International Monetary Fund.

The world's poorest nations owe the IMF, World Bank and individual nations
hundreds of billions of dollars and many say they are crippled by debt
repayments, which some campaigners put at around $100 million a day.

The G7 comprises Canada, United States, Japan, Britain, France, Germany and
Italy.

PLENTY OF WORK TO DO

Brown last year said Britain would spend an extra 100 million pounds a year
on debt relief for more than 30 of the world's poorest countries to help
them repay debts for the World Bank and ADB.

Canada's share will see it pay out about C$172 million over the next five
years to the World Bank and the ADB.

Brown, who last month toured Kenya, Mozambique, Tanzania and South Africa t=
o
put the spotlight on African debt relief after an outpouring of sympathy fo=
r
nations stricken by the Indian Ocean tsunami, welcomed the Canadian
proposals.

"I congratulate Minister Goodale on the bold announcement today that Canada
will pay their share of 100 per cent relief on multilateral debt," Brown
said.

But there is still plenty of work to do.

A senior German government official said earlier on Wednesday that G7
finance ministers were not likely to reach any decisions on financing extra
development aid at the weekend.

U.S. officials, meanwhile, have long indicated that they prefer to help
poorer nations through grants, not loans.

They have also so far signaled a strong unwillingness to back Brown's
proposals to provide immediate debt relief by leveraging aid budgets in the
capital markets through an International Finance Facility (IFF).

U.S. Treasury Undersecretary John Taylor said this week that he expected
substantial discussion at the G7 on debt relief but that Treasury Secretary
John Snow would be pushing his own plan, adding that the U.S. "just cannot
support" the IFF plan.

Brown said in an interview with the Guardian newspaper published on
Wednesday that he still will be pushing hard to get all G7 nations on board
and reminding the Americans that helping developing nations can help them i=
n
their war on terror.

"There is a sense of momentum," Brown told the paper. "We are winning
support. Now is the time to take the next step forward. We are making a
major push this weekend. We are demanding action this weekend from the G7."