[stop-imf] G7 supports 'as much as' 100% cancellation; Jubilee USA reacts

[Robert Weissman]

Dear friends,

The G-7 Finance Ministers have just concluded their meeting in London and r=
eleased a statement.

In short, we can celebrate a small step forward -- today for the first time=
, the G-7 as a group officially indicated the need for "as much as 100% mul=
tilateral debt relief." This represents progress and the first time such la=
nguage has been used by the G-7 as a whole. Congratulations to all for your=
 efforts over the past few years -- this is a victory we should acknowledge=
 our contributions to.

Of course, with any announcement by creditors and governments, the devil is=
 in the details. Though the G-7 have agreed in principle, they have not ind=
icated specifics and have pushed discussion on which countires will be elig=
ible, how it will be financed, conditions, etc. to the April Spring meeting=
s of the IMF/World Bank. We have our work cut out for us -- to insist that =
this be actual debt cancellation, that it be for all impoverished countries=
 not just the HIPC countries, and that it come without devastating economic=
 conditions attached. Our struggle is far from over and we will need your c=
ontinued support to ensure this commitment turns into a reality. Moreover t=
his discussion does not include questions of odious, illegitimate, or debt =
owed by middle-income countries -- all issues that Jubilee USA is committed=
 to building campaigns around in the medium term.

IMPORTANT: There will be stories on the outcome of the G-7 meeting in tomor=
row's and Monday's papers and online. If you see such stories in your local=
 papers, it is critical to respond with a letter to the editor. You can use=
 talking points drawn from the press release below -- the critical thing to=
 emphasize is the though this is an encourageing first step (that Jubilee U=
SA has campaigned for for years), there must be full cancellation for all i=
mpoverished countries without harmful conditions, and that action must take=
 place by April.

See below for Jubilee's reaction to media as well as the official statement=
s by the G7.

Best
Neil Watkins
Jubilee USA

++++++++++++++++++++

JUBILEE USA NETWORK
For Immediate Release =96 February 5, 2005

Contact: Neil Watkins, 202-421-1023 (mobile)

Jubilee USA Network Reacts to Outcome of G-7 Finance Ministers Meeting in L=
ondon

G-7 Agreement on Need for 100% Cancellation Encouraging, but Plan Must Come=
 without Harmful Conditions, Apply to All Impoverished Nations

G-7 Response on Tsunami-Affected Countries=92 Debts =91Completely Inadequat=
e=92

WASHINGTON =96 As G-7 Finance Ministers concluded their meeting in London t=
oday, Jubilee USA Network was encouraged that learn ministers have indicate=
d their willingness to provide as much as 100% multilateral debt cancellati=
on, a long time demand of the Jubilee USA Network. But the group cautioned =
that the plan must be broadened and that critical questions about the initi=
ative must be addressed as the upcoming April IMF/World Bank spring meeting=
s near.

The communiqu=E9 released by the G-7 today indicates that the G-7 have agre=
ed in principle to =93provide as much as 100% multilateral debt relief=94 a=
nd that the G-7 asked IMF Managing Director Rodrigo de Rato to bring propos=
als on how to finance debt cancellation for discussion at the April spring =
meetings of the IMF and World Bank in Washington.

=93Though we are encouraged to hear that for the first time the G-7 have of=
ficially embraced the call for 100% multilateral debt cancellation, we insi=
st that this plan must be actual cancellation =96 not just debt service rel=
ief, that it apply to all impoverished countries, and that it must come wit=
hout devastating economic conditions,=94 said Neil Watkins, National Coordi=
nator of Jubilee USA Network. =93We will be pressuring our government to se=
e these commitments turned into action in the coming months.=94

Jubilee USA Network indicated several key benchmarks that must be addressed=
 as discussions on debt cancellation proceed leading into the April IMF/Wor=
ld Bank spring meetings, including:
1.=09100% cancellation. There must be full (100%) debt stock cancellation f=
or impoverished nations. Proposals put forward by the UK and Canada would n=
ot cancel debt stock, but only relieve debt service payments for 10 years.
2.=09Leave no country behind. The G-7 communiqu=E9 indicates that there =93=
will be a case-by-case analysis of HIPC countries=94 for consideration for =
100% cancellation. It is critical that debt cancellation apply to all impov=
erished nations, not simply those that qualify for the IMF/World Bank=92s H=
IPC Initiative.
3.=09No economic conditions on debt cancellation. Debt cancellation must co=
me without externally imposed conditions on impoverished nations. Civil soc=
iety in impoverished nations must be empowered to ensure accountability in =
the use of funds released by debt cancellation.
4.=09IMF/World Bank Must Pay Their Fair Share. The IMF can sell gold and ra=
ise more than $35 billion to finance cancellation of IMF and World Bank deb=
t. The World Bank can mobilize at least $17 billion in accumulated and futu=
re profits for debt cancellation. These sources of finance must be tapped i=
f there are to be enough resources to extend cancellation to a broad range =
of countries.

Though encouraged by the developments on multilateral debts owed by impover=
ished nations, Jubilee USA Network characterized the creditors=92 response =
to calls for debt cancellation for nations affected by the Tsunami =96 a mo=
ratorium on payments for one year -- as =93completely inadequate.=94

=93People in the US and elsewhere showed their generosity to nations affect=
ed by the Tsunami with huge contributions, but clearly the G-7 governments =
have decided not to show such goodwill when it comes to these nations=92 de=
bts. The G-7 chose a short-term moratorium over cancellation, which is a fa=
ilure of leadership,=94 said Watkins.

Jubilee USA Network noted that the discussions on multilateral debt cancell=
ation for impoverished nations in the G-7 are only the first step on a much=
 longer journey towards freedom from debt. Jubilee USA points out that the =
discussion in the G-7 now only applies to a very particular type of debt (m=
ultilateral) for the very poorest nations and the Network believes that deb=
t cancellation and freedom from debt domination is urgent for nations acros=
s the global South for many types of debts and its work will reflect that b=
roader agenda in the months and years ahead.
###

+++++++++++++++++++++++++++

G7 Finance Ministers Conclusions on Development
London, February 5, 2005
[See also Statement of G7 Finance Ministers and Central Bank Governors]

1. We reaffirm our commitment to help developing countries achieve the Mill=
ennium Development Goals by 2015.[1] We will make particular efforts in Afr=
ica, which on current rates of progress will not meet any of the Millennium=
 Development Goals by 2015. This report sets out the steps we plan to take.

2. At the International Conference on Financing for Development in Monterre=
y on 21-22 March 2002, the international community agreed on a partnership =
for development, in which developing countries are primarily responsible fo=
r their own economic and social development, supported by the international=
 community. The range of international support agreed at Monterrey included=
 action on: a more open world trade system; increased aid effectiveness; ab=
sorption capacity; increased levels of aid; and debt relief.

3. In order to make progress on social and economic development, we believe=
 it is essential that developing countries put in place the policies for su=
stainable development. Sound, accountable and transparent institutions and =
policies are the basis for sustained economic growth and poverty reduction.=
 Increasing fiscal transparency is essential and a priority for developing =
countries is to tackle corruption, which is a significant barrier to growth=
, private sector development, investment and poverty reduction. A number of=
 other measures, such as establishing a credible legal framework, need to b=
e taken to reduce or eliminate impediments to private investment, both dome=
stic and foreign.

4. It is crucial that the international community improves the effectivenes=
s of aid. In particular bilateral and multilateral donors need to: harmonis=
e their operational procedures; align aid behind country-owned priorities; =
and provide for measurable results. Donors must also: focus their aid on po=
verty reduction; enhance efforts to untie aid, based on DAC principles; and=
 deliver aid in a more predictable way. We look forward to agreement on pra=
ctical steps to improve aid effectiveness at the Paris OECD DAC High Level =
Forum in March.

5. Progress on the Doha Development Agenda is critical to global economic g=
rowth and poverty reduction.  We must ensure that the Doha Round delivers s=
ubstantial benefits to developing countries.  We encourage both developed a=
nd developing countries to play an active role in the negotiations to ensur=
e that an ambitious outcome is achieved.  We recognise that developing coun=
tries face particular problems and need the flexibility to sequence reforms=
 to their trade policies. We call on the IFIs to develop proposals for addi=
tional assistance to countries, consistent with debt sustainability, to eas=
e adjustment in these economies, based on a systematic analysis of transiti=
on costs and consistent with country-owned development strategies, so they =
can increase their capacity to take advantage of more open markets.

6. HIV/AIDS and malaria undermine growth in developing economies and progre=
ss towards the Millennium Development Goals.  In addition to treatment, car=
e, and the development of health systems, research on vaccines must be acce=
lerated.  We reaffirm our commitment to the Global HIV Vaccine Enterprise, =
and will consider how to increase public research.  We will also explore th=
e use of advance purchase commitments to drive private sector investment.

7. The Enhanced HIPC Initiative has to date significantly reduced the debt =
of 27 countries, and we reaffirm our commitment to the full implementation =
and financing of the Initiative.  Moreover, individual G7 countries have go=
ne further, providing up to 100 per cent relief on bilateral debt. However,=
 we recognise that more still needs to be done. We are agreed on a case-by-=
case analysis of HIPC countries, based on our willingness to provide as muc=
h as 100 per cent multilateral debt relief. We also ask the IMF and the Wor=
ld Bank to look at the issue of debt sustainability in other low-income cou=
ntries. To finance the relief of debts owed to the IMF and to enable the Fu=
nd to continue to play a role in the poorest countries, the Managing Direct=
or has stated that he will bring forward proposals at the Spring Meetings, =
covering the Fund's gold and other resources and in an orderly way.  We loo=
k forward to his proposals. For the relief of debts owed to the World Bank =
and African Development Bank we will work with their management and shareho=
lders to bring forward proposals for agreement at the Spring Meetings to ac=
hieve this without reducing the resources available to the poorest countrie=
s through these institutions. We also call on non-Paris Club creditors to p=
rovide at least their share of HIPC debt relief, and we ask the IMF to repo=
rt on progress at the Spring Meetings.

8. In addition to debt relief, we recognised at Monterrey that a substantia=
l increase in ODA and other resources will be required to assist developing=
 countries to achieve the internationally agreed development goals and obje=
ctives, including those contained in the Millennium Declaration. We acknowl=
edged the efforts of all donors whose ODA contributions exceed, reach or ar=
e increasing towards the Monterrey targets. We emphasise the importance of =
an ambitious replenishment of IDA 14.

9. As we prepare for decisions at the G8 Summit in Gleneagles we agree a wo=
rk programme on: the IFF and its pilot, the IFF for immunisation; some of t=
he revenue proposals from the Landau Report brought forward by France and G=
ermany which could also refinance the IFF; the Millennium Challenge Account=
; and other financing measures; so that decisions can be made on the consti=
tution of and participation in a financing package to achieve the Millenniu=
m Development Goals.

Note

[1] As Endorsed by Heads of State and Government in the UN General Assembly=
 on September 8, 2000.

[back to top]
Source: HM Treasury


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Statement of G7 Finance Ministers and Central Bank Governors
London, February 4-5, 2005
[See also G7 Finance Ministers Conclusions on Development]

G7 Finance Ministers and Central Bank Governors met in London.  We are cons=
cious of our responsibility to respond positively to the challenges and opp=
ortunities of the global economy.  Recognising the need for greater and wid=
er partnerships, we held an informal meeting with key global economies and =
continued our productive dialogue with the Chinese authorities.

Since our meeting in October the economic cycle has matured and global grow=
th moderated, but is expected to remain robust for 2005.  Risks are balance=
d, though global imbalances remain. Inflationary pressures remain subdued. =
 We recognise that each of our countries must play its part to support long=
-term sustainable global growth: key priorities are that the United States =
has committed to fiscal consolidation; Europe and Japan to further structur=
al reform. We agreed on the importance to global growth of an ambitious res=
ult at the Hong Kong WTO ministerial with a view to concluding the Doha Dev=
elopment Round, including financial services.  We committed to provide supp=
ort to build the infrastructure and capacity to enable developing countries=
 to benefit from trade opportunities and called on the IFIs to play a major=
 role in this.

We discussed medium-term energy issues and the risks of current oil prices.=
 Market transparency and data integrity is key to the smooth operation of m=
arkets. We welcomed concrete actions in improving data provision to oil mar=
kets and encouraged further work, including on oil reserves data, by releva=
nt international organisations.  The Extractive Industries Transparency Ini=
tiative can increase fiscal transparency and help improve the use to which =
oil revenues are put. We call on international institutions to work with oi=
l producing countries to ensure a climate conducive to investment.  We reco=
gnised the importance of raising medium-term energy supply, of energy effic=
iency, and of the importance of technology and innovation in ensuring energ=
y security.

We reaffirmed that exchange rates should reflect economic fundamentals.  Ex=
cess volatility and disorderly movements in exchange rates are undesirable =
for economic growth.  We continue to monitor exchange markets closely and c=
ooperate as appropriate.  In this context, we emphasise that more flexibili=
ty in exchange rates is desirable for major countries or economic areas tha=
t lack such flexibility to promote smooth and widespread adjustments in the=
 international financial system, based on market mechanisms.

Flexible economies with efficient labour markets are key to sustained econo=
mic success.  In an increasingly integrated global economy, bringing more p=
eople into the labour market would raise living standards and play an impor=
tant part in increasing the sustainability of public finances, as populatio=
ns age. We reviewed our experience in this area and are committed to taking=
 further reforms.

We reiterated our condolences and sympathies to all those directly affected=
 by the tsunami disaster.  We reviewed the substantial response to these tr=
agic events and discussed reconstruction needs on the basis of the prelimin=
ary assessment by the IMF and World Bank.  For affected countries that requ=
est it, we agreed exceptionally to defer debt payments up to the end of 200=
5 (consistent with national laws), without payment of interest during this =
period, and to promote this in the Paris Club. We will review at our next m=
eeting the need for further assistance based on the full needs assessment.

We discussed the challenges of meeting the Millennium Development Goals and=
 the opportunities in the coming year and have published our conclusions se=
parately.

We also agreed to meet our counterparts from the Broader Middle East and No=
rth Africa region at the time of our next meeting.

The IFIs must adapt to meet the challenges of the modern global economy.  W=
e undertook to support World Bank and IMF management in their strategic rev=
iews of their institutions.  We look forward to discussing this topic furth=
er at the Spring Meetings.



Neil Watkins
National Coordinator
Jubilee USA Network
(202) 783-0129
www.jubileeusa.org