news analysis advocacy
No Easy Victories: African Liberation
and American Activists over a Half Century
New book discount offer!
tips on searching
   the web



Visit the AfricaFocus
Country Pages

Burkina Faso
Cape Verde
Central Afr. Rep.
Congo (Brazzaville)
Congo (Kinshasa)
Côte d'Ivoire
Equatorial Guinea
São Tomé
Sierra Leone
South Africa
South Sudan
Western Sahara

Get AfricaFocus Bulletin by e-mail!         Read more on |Africa Economy & Development||Africa Debt|
URL for this file:

Print this page

Africa: Postponing Debt Decisions

AfricaFocus Bulletin
Feb 8, 2005 (050208)
(Reposted from sources cited below)

Editor's Note

Finance ministers of the G7 group of the world's richest countries, meeting in London from February 4 to 5, stated their willingness to consider "as much as 100 per cent multilateral debt relief" for the poorest countries. They also asked the International Monetary Fund (IMF) to consider how it might contribute to financing such debt relief. In theory, these could be significant steps forward. In practice, the G7 countries remain deeply divided. They disagree both about the political urgency and about the possible mechanisms for acting to free up more resources to fight global poverty.

The most striking disagreements are between London and Washington. British Prime Minister Tony Blair and Chancellor of the Exchequer Gordon Brown both see political advantage in being seen to do something about African poverty. In official Washington, however, fighting poverty, whether at home, in Africa, or elsewhere in the world, is hardly visible on the radar screen. President Bush and other top officials are particularly hostile to multilateral programs or to any implication that, as Nelson Mandela stressed in a speech at Trafalgar Square on February 3, overcoming poverty is not a gesture of charity but an act of justice.

G7 disagreements on how to finance debt relief focus not only on how much debt to cancel, but also on who should pay, whether additional aid resources should also be provided, and how any new mechanisms would affect the influence of existing bilateral agencies and international financial institutions. NGOs lobbying for debt cancellation also stress that no G7 government has yet acknowledged the damaging effects of inappropriate economic policies imposed by creditors.

This issue of AfricaFocus Bulletin contains a roundup of excerpts related to the issue of debt cancellation and the G7 finance ministers meeting, with references to the sources for full text in each case. Included are excerpts from (1) a summary analysis in Timesonline, (2) the summary of a joint policy paper from ActionAid, Cafod, and Oxfam issued just before the meeting, (3) a press release from Jubilee USA Network following the meeting, (4) the ministerial communique, and (5) a post-meeting statement by U.S. Under Secretary of the Treasury for International Affairs John Taylor.

Previous issues of AfricaFocus Bulletin focused on Africa's debt are available at

++++++++++++++++++++++end editor's note+++++++++++++++++++++++

Africa hoping for scraps from scrapping

by Gary Duncan

Timesonline February 07, 2005

[Excerpts. See for full text.]

Gordon Brown is good at putting on a brave face when confronted by disappointing news. It is just as well. ...

The tirelessly ambitious Mr Brown has spent weeks in detailed diplomacy and painstaking groundwork to try to ensure that the G7 talks he chaired in London emerged as a triumphant staging post in Britain's campaign to bring relief to a stricken Africa. He even drafted in Nelson Mandela to bend the ears of his fellow ministers.

Then, on the very eve of the gathering, America delivered the bitter blow of sending a substitute, John Taylor, in the place of its Treasury Secretary, John Snow. Worse still, the substitute then delivered a blunt US repudiation of the Chancellor's key proposals within hours of arriving in London. On Friday night, Mr Brown's grand designs appeared to be coming apart at the seams.

By the close of the talks on Saturday, though, a compromise had been cobbled together. ... a programme for further research and negotiation through the spring which the Treasury optimistically regards as an "action plan".

Certainly, Mr Brown has extracted from his counterparts a new commitment to debt relief, with agreement that the world's poorest nations should have as much as 100 per cent of their liabilities written off. In the circumstances, that was an achievement. But note that, thanks to Japanese intransigence, the G7's pledge is for "up to" 100 per cent relief. Note too that at the somewhat teutonic insistence of the unenthusiastic Germans, this will be now be considered only on a case-by-case basis.

The reality is that while the G7 now agree that something must be done about Africa, they remain deeply divided over what. ... There is no consensus and much conflict. Like the separate realities of Africa and the West, the competing approaches taken by G7 members remain worlds apart. No amount of rhetoric can bridge the gulf. ...

Time is running short if Britain's presidency is now to deliver tangible results for Africa worthy of the vaulting ambitions espoused by the Government. With the G8 summit of G7 leaders plus Russia's President Putin set for July, the Treasury and No 10 need to make substantial progress on the nitty-gritty of real proposals (and real cash) by the spring. ... Africa's poor, meanwhile, can only wait for some scraps to emerge from the fighting among the world's richest countries.

Do the Deal: The G7 must act now to cancel poor country debts

Joint NGO Briefing Paper, February 2005

ActionAid, CAFOD, and Oxfam

Summary (excerpts)

Every month rich country leaders delay a deal on debt cancellation, the poor pay with their lives. ...

Every week, poverty kills more people than the Tsunami. A child dies every three seconds through preventable diseases. Yet at the same time the poorest countries in the world routinely spend more on debt repayments than they do on health. In 2002 low-income countries paid out $39 billion in debt repayments to rich country creditors - the equivalent of $100 million every day. In that same year, despite the billions living in poverty, the millions out of school, and the thousands dying daily, they received only $17bn billion in grant aid.

On Friday 4th February 2005 the Finance Ministers of the G7 will meet in London. These seven men have the power to make a decision which would end the crippling debt burden of the poorest countries. G7 leaders have made warm speeches about the importance of solving the debt problem. The time for talking is over. The world is watching - and the time to act is now.

Following massive campaigning by the Jubilee movement worldwide, rich countries agreed to some debt cancellation in Cologne in 1999. Sadly, more than five years on, it is clear that the debt problem is far from being solved. While the Heavily Indebted Poor Countries (HIPC) initiative has delivered almost $30bn of debt cancellation and pledged to deliver more than $20bn more, only 7 countries have actually seen their debts brought down to levels considered 'sustainable', even according to the narrow and inadequate criteria of the HIPC initiative. Even those countries that have qualified for debt relief are still paying $2.8bn a year to their creditors, 15% of their revenues and in many cases more than they spend on education or health.

Debt relief works. The debt relief that has been delivered so far has had a massive positive impact on fighting poverty. Debt relief in Tanzania enabled the Government to make primary education free. This meant over 2 million children can now go to school. In Benin debt relief is paying for staff at rural clinics across the country, and in Mali the debt relief dividend has allowed the recruitment of 5000 community teachers.

When politicians want to act, they can. Rich countries can and do find the money. In one day in November 2004, rich countries agreed to cancel a total of $31 billion of debt owed by Iraq. This is more than all the HIPC debt relief granted to all the poorest countries in the world in the last five years.

At the same time the IMF is also sitting on a huge pile of gold it neither needs nor uses. These 100 million ounces are worth over $45 billion dollars, but are valued by the IMF at $8 billion. Revaluing or selling this gold would immediately release vital resources to finance debt cancellation.

Debt campaigners worldwide have consistently argued that poor country debt will only truly be 'sustainable' if debt service payments do not compromise the ability of such countries to meet the internationally-agreed Millennium Development Goals (MDGs). Recently this position was fully endorsed by the report of the UN Millennium Project under Jeffrey Sachs.

What this will mean for the majority of low income countries is 100% debt cancellation, plus significant increases in aid, if the MDGs are to be met. Set by this standard, the progress made to date through the HIPC initiative remains woefully inadequate.

The UK Government announced last September that it will pay its share of the debts owed by 21 poor countries to the World Bank and African Development Bank until 2015, and will push for the revaluation or sale of IMF gold to fund IMF relief.

This step is welcome, as it releases vital resources for these countries to spend on fighting poverty. The rest of the G7 should follow suit immediately. However, the proposal should also be expanded further to more than just 21 countries, and involve debt stock cancellation rather than just debt service relief. It should also use resources that are additional to existing bilateral ODA budgets. Lastly it should not be subject to countries having to implement risky and unproven policy conditions in order to access the relief. ...


  • 100% multilateral debt cancellation must be provided now to all low-income countries which need such relief in order to meet the MDGs, under a fair and transparent process.
  • Debt relief should not be financed out of existing aid budgets, but from new donor contributions, and the sale or revaluation of IMF gold.
  • Debt relief should not be confined to HIPCs, but should also be extended to other poor countries that need debt relief in order to meet the MDGs.
  • There should be an end to harmful economic policy conditionality associated with debt relief. Debt relief should be provided to any country able to use such relief to meet the MDGs.
  • In countries where human development needs are greatest, and where the feasible tax base is narrow, future aid flows should be in the form of grants rather than loans for the foreseeable future.
  • In future, a fair, transparent and comprehensive international insolvency process should be created to allow creditor and debtor countries to resolve debt crises without compromising the ability of poor countries to meet the basic social needs of their people, and without forcing poor countries to repay what the insolvency process determines to be odious debts.

Jubilee USA Network Reacts to Outcome of G-7 Finance Ministers Meeting in London

February 5, 2005

Contact: Neil Watkins, National Coordinator Jubilee USA Network (202) 783-0129, 202-421-1023 (mobile)

[Excerpts. See for full text.]

Washington - As G-7 Finance Ministers concluded their meeting in London today, Jubilee USA Network was encouraged that learn ministers have indicated their willingness to provide as much as 100% multilateral debt cancellation, 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 initiative must be addressed as the upcoming April IMF/World Bank spring meetings near.

The communique released by the G-7 today indicates that the G-7 have agreed in principle to 'provide as much as 100% multilateral debt relief' and that the G-7 asked IMF Managing Director Rodrigo de Rato to bring proposals on how to finance debt cancellation for discussion at the April spring meetings of the IMF and World Bank in Washington.


Jubilee USA Network indicated several key benchmarks that must be addressed as discussions on debt cancellation proceed leading into the April IMF/World Bank spring meetings, including:

  1. 100% cancellation. There must be full (100%) debt stock cancellation for impoverished nations. Proposals put forward by the UK and Canada would not cancel debt stock, but only relieve debt service payments for 10 years.
  2. Leave no country behind. The G-7 communique indicates that there "will be a case-by-case analysis of HIPC countries" for consideration for 100% cancellation. It is critical that debt cancellation apply to all impoverished nations, not simply those that qualify for the IMF/World Bank¹s HIPC Initiative.
  3. No economic conditions on debt cancellation. Debt cancellation must come without externally imposed conditions on impoverished nations. Civil society in impoverished nations must be empowered to ensure accountability in the use of funds released by debt cancellation.
  4. IMF/World Bank Must Pay Their Fair Share. The IMF can sell gold and raise more than $35 billion to finance cancellation of IMF and World Bank debt. The World Bank can mobilize at least $17 billion in accumulated and future profits for debt cancellation. These sources of finance must be tapped if there are to be enough resources to extend cancellation to a broad range of countries.


Also newly available on the Jubilee USA Network website

A January 2005 briefing report by Sony Kapoor on World Bank Resources and Debt Cancellation. The report, noting that the World Bank is one of the most resource-rich financial institutions in the world, shows that the Bank could generate as much as $17.5 billion from internal resources for debt cancellation without any significant impact on its operations or credit ratings. The Bank, Kapoor notes, has net income of $600 million a year from its lending operations to middle-income countries, and some $37 billion in capital reserves. Its equity to loan ratio is far greater than other highly rated banks, and could easily draw on its capital if there were the political will to do so.


G7 Finance Ministers Conclusions on Development

London, February 5, 2005

[Excerpts. See for full text.]


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 gone 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 much as 100 per cent multilateral debt relief. We also ask the IMF and the World Bank to look at the issue of debt sustainability in other low-income countries. To finance the relief of debts owed to the IMF and to enable the Fund to continue to play a role in the poorest countries, the Managing Director 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 look 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 shareholders to bring forward proposals for agreement at the Spring Meetings to achieve this without reducing the resources available to the poorest countries through these institutions. We also call on non-Paris Club creditors to provide at least their share of HIPC debt relief, and we ask the IMF to report on progress at the Spring Meetings.

8. In addition to debt relief, we recognised at Monterrey that a substantial increase in ODA and other resources will be required to assist developing countries to achieve the internationally agreed development goals and objectives, including those contained in the Millennium Declaration. We acknowledged the efforts of all donors whose ODA contributions exceed, reach or are increasing towards the Monterrey targets. ...

9. As we prepare for decisions at the G8 Summit in Gleneagles we agree a work programme on: the IFF [International Financing Facility] and its pilot, the IFF for immunisation; some of the revenue proposals from the Landau Report brought forward by France and Germany which could also refinance the IFF; the Millennium Challenge Account; and other financing measures; so that decisions can be made on the constitution of and participation in a financing package to achieve the Millennium Development Goals.

Statement by John B. Taylor, Under Secretary for International Affairs, after the Meeting of G7 Finance Ministers and Central Bank Governors, London, UK

February 5, 2005

[Excerpts. See for full text.]


The U.S. came to this meeting to emphasize first and foremost the need to strengthen economic growth. This is of paramount importance for the benefit of our own economies and the world as a whole - and indeed, achieving stronger growth was the centerpiece of our discussions.


On the subject of growth, I want to note how pleased I was to join the G-7 Finance Ministers in meeting this morning with our counterparts from key emerging market countries - Brazil, China, India and South Africa. These are rapidly emerging countries, which represent an increasing share of the global economy and will play an ever larger role over time. Their views enriched our own discussions, and I look forward to continued consultations going forward.


A vibrant world economy also depends on free trade. Today, we called for urgent conclusion of the Doha Development Round. Allowing international competition in the financial sector is particularly important for developing countries to be able to respond efficiently to the new trade opportunities afforded by such an agreement. Research shows that greater foreign direct investment in the financial services sector, coupled with strengthened regulation and supervision, helps spur financial sector development and efficiency - and helps promote economic growth. We are urging all countries to submit ambitious offers on financial services by the deadline for such offers this spring.


Turning more broadly to development, Gordon Brown has rightly highlighted the importance of tackling the challenges of global poverty. This was a key focus of our discussions today. The United States is deeply committed to helping the poorest countries. And we have acted accordingly - for instance, increasing our development assistance by 90 percent between 2000 and 2004, well beyond the commitment we made in Monterrey. Assistance has doubled to thirty-two sub-Saharan African countries since 2000. More importantly, we are being more selective in deploying our assistance funds, through initiatives like the Millennium Challenge Account, and we are leveraging our official assistance by catalyzing other financial flows, reducing trade barriers, and encouraging debt relief.

For some time now, the United States has strongly stated our belief that more must be done to prevent the build-up of unsustainable debts in poor countries. Increased reliance on grants, as we have achieved in several MDB [Multilateral Development Banks] replenishments, is a crucial component of any long-term solution. But we can do more to put these countries on a path to the future.

There are a number of proposals about how to proceed on debt. The United States favors action to provide up to 100 percent relief of MDB soft loans to the poorest debt-vulnerable countries. Also, we believe that all bilateral creditors should follow the United States in providing 100 percent debt relief under the Enhanced HIPC Initiative. This action, coupled with grants going forward, will put these poor countries on a sustainable path. On the IMF side, it will be important to think carefully about how to ensure that the IMF engages productively in poor countries. This is an area that requires further consideration. We look forward to working together to achieve consensus on an approach that resolves ongoing debt sustainability concerns and puts an end to the lend-and-forgive approach to financing development.


AfricaFocus Bulletin is an independent electronic publication providing reposted commentary and analysis on African issues, with a particular focus on U.S. and international policies. AfricaFocus Bulletin is edited by William Minter.

AfricaFocus Bulletin can be reached at Please write to this address to subscribe or unsubscribe to the bulletin, or to suggest material for inclusion. For more information about reposted material, please contact directly the original source mentioned. For a full archive and other resources, see