[stop-imf] G-8 Agree on Debt, Jubilee USA Reacts

[Robert Weissman]

Jubilee's response gets this exactly right: The G7 deal on debt

cancellation is far from perfect, but it is a *major* victory, and will
bring tremendous benefits from those countries which benefit from it.

Below:

1)=09Reuters: Rich nations agree on African debt relief
2)=09Jubilee USA Press Statement in Reaction
3)=09G-8 Finance Ministers Statement on Development and Debt

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1) Reuters: Rich nations agree on African debt relief
Sat Jun 11, 2005 09:33 AM ET

By Justyna Pawlak and Luke McCann
LONDON (Reuters) - The world's wealthiest countries agreed on Saturday towr=
ite off more than $40 billion of African debts.

The deal struck by finance ministers from the Group of Eight industrialized=
 nations is part of a British-led campaign to rid sub-Saharan Africa ofpove=
rty and diseases such as malaria and AIDS that kill millions every year.
British Finance Minister Gordon Brown said the deal would provide 100 perce=
nt write-offs "immediately" for 18 countries and that more countries would =
qualify for relief later.

"This is the most comprehensive statement the finance ministers have everma=
de on debt and poverty," he told a news conference.

"This is not a time for timidity, this is a time for boldness."

The accord covered debts to international lending agencies such as the Worl=
d Bank, African Development Bank and International Monetary Fund.

Britain, chairing the G8 club this year, was determined to get an accord on=
 debt at the talks in London but faces a far harder time drumming up suppor=
t for a doubling of aid to Africa ahead of a meeting of G8 leaders inScotla=
nd next month.

Pop star Bob Geldof and others are urging a million people to turn up in Sc=
otland to demand a deal on aid for Africa.
Brown had sought backing for an International Finance Facility (IFF) thatwo=
uld double aid to the poorest countries to $100 billion by issuing bonds us=
ing rich nations' development budgets as collateral.

But Washington has opposed the plan so Brown is likely to
launch a pilot IFF project instead that would provide funds for vaccination=
 programs in Africa without U.S. or Japanese support.

Turning to their own economic problems, the ministers issued a communiquesa=
ying growth was likely to be a little less strong this year than last and r=
enewing declarations that high world oil prices and other imbalancesposed r=
isks.

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2)=09Jubilee USA Press Statement in Reaction

Jubilee USA Network * www.jubileeusa.org

FOR IMMEDIATE RELEASE
Saturday, June 11, 2005

Contact: =09Debayani Kar, 202-246-8143
=09=09Neil Watkins, 202-421-1023

Jubilee USA Encouraged By Apparent G-8 Agreement for 100% Cancellation ofIM=
F, Multilateral Debts

US Debt Group Rejects Harmful Conditions Additional Countries Must Meet to =
Qualify; Proposal Must Be Expanded Beyond HIPC Initiative

WASHINGTON =96 As G-8 Finance Ministers concluded their meeting in London, =
Jubilee USA Network was encouraged today by the apparent agreement reached =
by the G-8 for 100% cancellation of IMF and multilateral debts for some hea=
vily indebted countries, but insisted all impoverished nations mustbe inclu=
ded in the deal. Though 18 countries will receive immediate cancellation, t=
he Network demanded that the G-8 also provide immediate cancellation to oth=
er impoverished nations without forcing them to implement harmful economic =
policies as part of the HIPC (Heavily Indebted Poor Countries) Initiative.

=93The G-8 proposal for 100% debt cancellation for some poor nations to the=
 IMF and other international lenders is an important first step, but the de=
al must be expanded to include all impoverished countries, not just those e=
ligible for the HIPC Initiative,=94 said Neil Watkins, National Coordinator=
 of Jubilee USA Network. =93Debt cancellation must come without subjecting =
these countries to devastating economic conditions.=94

The G-8 agreement for multilateral debt cancellation apparently includes a =
deal for 100% cancellation of debt to the World Bank, IMF, and African Deve=
lopment Fund for 18 =93completion point=94 HIPC nations. The proposalwould =
establish an important precedent, long advocated by Jubilee USA Network, th=
at poor countries must receive 100% cancellation of their debts to multilat=
eral creditors.

Jubilee USA Network is concerned, however, that the eligible nations repres=
ent only a small portion of the countries that require immediate 100% cance=
llation; for instance there are 62 low-income countries that need debt canc=
ellation to meet the MDGs, and 50 countries in the JUBILEE Act, a bill Jubi=
lee USA supports in Congress. Many other nations suffer under a burden of o=
dious or illegitimate debt.

Jubilee USA Network expressed strong concerns that the use of HIPC Initiati=
ve criteria to determine which countries beyond the initial 18 receive debt=
 cancellation is misguided as it requires countries to implement devastatin=
g economic policies, that have not been proven to increase per capita incom=
e growth or reduce poverty. Jubilee USA called on the HIPC Initiative and h=
armful economic conditions attached to debt cancellation to be abandoned an=
d all impoverished nations to receive 100% debt cancellation.

Jubilee USA Network further notes that action along the lines apparently ag=
reed by the G-8 on impoverished country debt would provide an importantfirs=
t step towards the Jubilee vision of a world where external debt no longer =
diverts resources from impoverished people or constrains policy choices. Ju=
bilee USA Network will continue to work for debt cancellation for more coun=
tries (such as impoverished countries not included in this deal, middle inc=
ome countries with large impoverished populations and those with odious/ill=
egitimate debts) and creditors (such as the InterAmerican Development Bank,=
 Asian Development Bank, bilateral, and private creditors) not included in =
this year's initiative in the years ahead.


Jubilee USA Network is the US arm of the international movement working for=
 debt cancellation for impoverished nations. Jubilee USA is a network of ov=
er 70 religious denominations, labor groups, environmental organizations, a=
nd community and advocacy groups working to break the chains of debt. For m=
ore information, see www.jubileeusa.org.

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3) G-8 Finance Ministers Statement on Development and Debt
G8 Finance Ministers=92 Conclusions on Development, London, 10-11 June 2005
1. We reaffirm the commitments we made at our meeting in February this year=
 to help developing countries achieve the Millennium Development Goals by 2=
015, to make particular efforts in Africa, which on current rates of progre=
ss will not meet any of the Millennium Development Goals by 2015, and to se=
t out for G8 Heads of Government and States the steps we believe can be tak=
en to further implement the Monterrey Consensus on an open world trade syst=
em; increased aid effectiveness; absorptive capacity; increased levels of a=
id; and debt relief.
2. We reaffirm our view that in order to make progress on social and econom=
ic development, it is essential that developing countries put in place the =
policies for economic growth, sustainable development and poverty reduction=
: sound, accountable and transparent institutions and policies; macroeconom=
ic stability; the increased fiscal transparency essential to tackle corrupt=
ion, boost private sector development, and attract investment; a credible l=
egal framework; and the elimination of impediments to privateinvestment, bo=
th domestic and foreign.
3. We reaffirm our view of February that it is crucial that the internation=
al community improves the effectiveness of aid. In particular bilateraland =
multilateral donors need to: harmonise their operational procedures;align a=
id behind country-owned priorities for growth and poverty reduction; and pr=
ovide for measurable results. Donors must also: focus their aidon poverty r=
eduction; enhance efforts to untie aid, based on DAC principles; and delive=
r aid in a more predictable way.   We welcome the progressmade at the Paris=
 OECD DAC High Level Forum in March, and call on the OECD DAC to set by Sep=
tember this year, ambitious and credible targets against all the indicators=
 of progress agreed at the March meeting.
4. A successful outcome for the Doha Development Agenda, our highest common=
 priority in trade policy for the year ahead, will bring real and substanti=
al benefits to poor countries. The Hong Kong Ministerial in December will b=
e a critical step towards a successful outcome of the DDA in 2006, which de=
livers substantial increases in market access for developing countries; est=
ablishes a timetable for the elimination of all trade-distorting export sup=
port in agriculture; and provides effective special and differential treatm=
ent for developing countries.
5. However, not all countries will benefit in the short term from reduction=
s in trade barriers. Some countries lack the capacity to produce and delive=
r goods to international markets competitively; for others, the transitiona=
l costs of moving to more open markets may be substantial.   We also recogn=
ise that poor countries face particular problems and need the flexibility t=
o decide, plan and sequence reforms to their trade policies to fit with cou=
ntry-owned development programmes.  We commit to provide support to enable =
developing countries to benefit from trade opportunities.  We call on the I=
FIs to submit proposals for the Annual Meetings for additional assistance t=
o countries to develop their capacity to trade and easeadjustment in their =
economies, based on a systematic analysis of transition costs, so they can =
take advantage of more open markets.
6. Tackling diseases that undermine growth and exacerbate poverty in develo=
ping countries will require not only strengthened health systems, but also =
improved treatment, including universal access for AIDS treatment by 2010 a=
nd development of vaccines, including for HIV and malaria.   We have made p=
rogress this year in implementing the Global HIV Vaccine Enterprise agreed =
at Sea Island, and are committed both to taking this further; and to scalin=
g up our support for vaccines and medicines research through the successful=
 Public Private Partnerships model.  We call for a report on progress by th=
e end of the year.   We recognise also that advance purchase commitments (A=
PCs) are potentially a powerful mechanism to incentivise research, developm=
ent and the production of vaccines for HIV, malaria and other diseases. We =
asked Minister Siniscalco to consult the relevant institutions, governments=
 and industry, with the aim of developing concrete proposals by the end of =
this year.
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 G8 countries have gon=
e further, providing up to 100 per cent relief on bilateral debt. However, =
we recognise that more still needs to be done and we have agreed the attach=
ed proposal.   We call upon all shareholders to support these proposals whi=
ch we will put to the Annual Meetings of the IMF, World Bank and African De=
velopment Bank.
8. We also recognised at Monterrey that a substantial increase in ODA andpr=
ivate capital flows will be required to assist developing countries toachie=
ve the Millennium Development Goals.  We acknowledge the efforts ofall dono=
rs, especially those who have taken leading roles in providing and increasi=
ng ODA and committing to further increases.
9. Specifically we welcome: the progress the EU has made towards the 0.39pe=
r cent ODA/GNI target agreed at Barcelona; the announcements by Franceand t=
he UK of timetables to reach 0.7 per cent ODA/GNI by 2012 and 2013 respecti=
vely; and the recent EU agreement to reach 0.7 per cent ODA/GNI by 2015 wit=
h an interim target of 0.56 per cent ODA/GNI by 2010 - a doubling of EU ODA=
 between 2004 and 2010.  In line with the EU agreement, Germany (supported =
by innovative instruments) and Italy undertake to reach 0.51 per cent ODA/G=
NI in 2010 and 0.7 per cent ODA/GNI in 2015. We welcome the tripling of US =
ODA to Sub-Saharan Africa and the near doubling of US ODA to all developing=
 countries since 2000. The US now accounts for roughly 25% of all ODA to Su=
b-Saharan Africa. In addition, we welcome the launch of the Millennium Chal=
lenge Account and the President=92s Emergency Plan for AIDS Relief. We welc=
ome Japan's commitment to double its ODA to Africa over the next three year=
s and Canada's budget plans to finance its commitment to double aid levels =
from 2001 to 2010, and to double aid to Africa by 2008.   In addition, we w=
elcome Russia's $2.2 billion contributionto the HIPC Initiative.
10. As we prepare for decisions at the G8 Summit in Gleneagles we continue =
our work programme on: the IFF and its pilot, the IFF for Immunisation;some=
 of the revenue proposals from the Landau Report, including a pilot project=
, supported and led by France and Germany, for a contribution on air travel=
 tickets to support specific development projects and to refinance the IFF;=
 the Millennium Challenge Account; the Enhanced Private SectorAssistance wi=
th the African Development Bank; and other financing measures; so that deci=
sions can be made on how to deliver and bring forward thefinancing urgently=
 needed to achieve the Millennium Development Goals.
11.    Nigeria is key to the prosperity of the whole continent of Africa. W=
e welcomed Nigeria=92s progress in economic reform as assessed in the IMF's=
 intensified surveillance framework, noted its move to IDA-only status, and=
 encouraged them to continue to reform.  We are prepared to provide a fair =
and sustainable solution to Nigeria's debt problems in 2005, within the Par=
is Club.

G8 Proposals for HIPC debt cancellation
Donors agree to complete the process of debt relief for the Heavily Indebte=
d Poor Countries by providing additional development resources which will p=
rovide significant support for countries' efforts to reach the goals of the=
 Millennium Declaration (MDGs), while ensuring that the financing capacity =
of the IFIs is not reduced. This will lead to 100 per cent debt cancellatio=
n of outstanding obligations of HIPCs to the IMF, World Bank and African De=
velopment Bank. Additional donor contributions will be allocated to all IDA=
 and AfDF recipients based on existing IDA and AfDF performance-based alloc=
ation systems. Such action will further assist their efforts to achieve the=
 MDGs and ensure that assistance is based on country performance. We ask th=
e World Bank and IMF to report to us on improvements on transparency on all=
 sides and on the drive against corruption so as toensure that all resource=
s are used for poverty reduction. We believe that good governance, accounta=
bility and transparency are crucial to releasing the benefits of the debt c=
ancellation.  We commit to ensure this is reaffirmed in future bilateral an=
d multilateral assistance to these countries.
Key elements:
=A7=09Additional donor contributions will be allocated to all IDA and AfDF =
recipients based on existing IDA and AfDF performance-based allocation syst=
ems.
=A7=09100 per cent IDA, AfDF and IMF debt stock relief for Completion Point=
HIPCs.
=A7=09For IDA and AfDF debt, 100 per cent stock cancellation will be delive=
red by relieving post-Completion Point HIPCs that are on track with theirpr=
ogrammes of repayment obligations and adjusting their gross assistanceflows=
 by the amount forgiven. Donors would provide additional contributions to I=
DA and AfDF, based on agreed burden shares, to offset dollar for dollar the=
 foregone principal and interest repayments of the debt cancelled . Additio=
nal funds will be made available immediately to cover the full costs during=
 the IDA-14 and AfDF-10 period. For the period after this, donors will comm=
it to cover the full costs for the duration of the cancelled loans, by maki=
ng contributions additional to regular replenishments of IDA and AfDF.
=A7=09The costs of fully covering IMF debt stock relief, without underminin=
g the Fund=92s financing capacity, should be met by the use of existing IMF=
 resources. In situations where other existing and projected debt relief ob=
ligations cannot be met from the use of existing IMF resources (e.g. Somali=
a, Liberia, and Sudan), donors commit to provide the extra resources necess=
ary. We will invite voluntary contributions, including from the oil-produci=
ng states, to a new trust fund to support poor countries facingcommodity pr=
ice and other exogenous shocks.
=A7=09Globally and on this basis we are committed to meeting the full costs=
to the IMF, World Bank and African Development Bank.  We will provide ona f=
air burden share basis resources to cover difficult-to-forecast costs, in e=
xcess of existing resources, to the IMF, IDA and AfDF over the nextthree ye=
ars. Subject to further analysis by the institutions we will provide up to =
$350-500 million for this purpose.  We are also committed, on a fair burden=
 share basis, to cover the costs of countries that may enterthe HIPC proces=
s based on their end-2004 debt burdens. We will also seekequivalent contrib=
utions from other donors to ensure all costs are covered and we will not je=
opardize the ability of these institutions to meet their obligations.Utiliz=
e appropriate grant financing as agreed to ensure that countries do not imm=
ediately re-accumulate unsustainable external debts, and are eased into new=
 borrowing.

We call upon all shareholders to support these proposals which would be put=
 to the Annual Meetings of the IMF, World Bank and African Development Bank=
 by September.