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G8 Finance Ministers deliver deal to cancel debt


June 13, 2005

G8 Finance Ministers deliver deal to cancel debt

Oxfam has welcomed the agreement by Finance Ministers from the world's richest countries, to cancel 100 per cent of the debts of 18 countries.

“This is a great step forward,” said Barry Coates, Executive Director of Oxfam New Zealand. “The cancellation of debts owed by the poorest, most heavily indebted countries will mean that around 280 million people living in these countries will have an opportunity to escape from the vicious cycle of poverty and indebtedness. However, this should not be seen as an opportunity for rich countries to impose unfair and inappropriate conditions such as privatisation and trade liberalisation.

“The decision to cancel the multilateral debt for these countries is a tribute, not only to the politicians who have at last honoured their promises, but also to the millions of people around the world who have been campaigning to drop the debt under the MakePovertyHistory coalition.”

The record of partial debt cancellation in the past gives confidence that the resources released by debt cancellation will be spent to reduce poverty. Partial debt cancellation in Tanzania, for example, has meant that the primary education population has increased by 66 per cent. Similarly, in Uganda 2.2 million people have gained access to clean water.

"Today's agreement is important because it endorses the principle of 100 per cent debt cancellation and opens up the possibility of countries outside the current Heavily Indebted Poor Countries debt relief scheme also benefiting in the future," said Coates.

Initial calculations suggest that the current deal covers less than 20 per cent of what is required for the poorest countries to achieve the Millennium Development Goals. The next step is to ensure that debt cancellation is extended to all the countries that urgently need it.

Oxfam has also long-argued that debt is only one part of the overall picture. With three weeks to go until the G8 summit in Gleneagles, the pressure is now on for world leaders to tackle the other challenges: to announce a doubling of aid by 2015 and to commit themselves to making serious progress on reforming unfair trade rules.

"The race to Gleneagles is now on, but there are still many hurdles for G8 leaders to clear. This first hurdle – debt cancellation – is around NZ $3bn a year at most for poor countries. G8 leaders now need to urgently pick up the pace, respond to the calls of millions of campaigners around the world, and put up an extra $70bn of aid to fund the fight against poverty."

Notes:

The deal covers NZ$70bn of debts owed by poor countries to the World Bank, the International Monetary Fund and the African Development Bank. The 18 initial countries, 14 of them in Africa, qualify because they have already been through the Heavily Indebted Poor Countries (HIPC) debt relief scheme. Other countries are expected to qualify when they meet the economic and political requirements.

Oxfam New Zealand, along with a diverse coalition of organisations from across New Zealand, is calling on the New Zealand Government to do its part to make poverty history in 2005. NZ overseas aid currently amounts to 0.26% of Gross National Income. A recent UN report indicates a need for NZ to set a timetable for meeting the agreed UN targets for aid levels – to almost double to 0.5% by 2009 and a further increase to 0.7% by 2015.

MAKEPOVERTYHISTORY Aotearoa New Zealand is part of one of the largest global campaigns in history The Global Call to Action against Poverty, now active in more than 60 countries. www.makepovertyhistory.org.nz

The Millennium Development Goals are eight targets agreed by over 190 governments in 2000 to help eradicate poverty through action by developed and developing countries.

They focus on eradicating extreme poverty and hunger, achieving universal primary education, promoting gender equality, reducing child mortality, improving maternal health, combating HIV/AIDS, malaria and other preventable diseases, ensuring environmental sustainability and developing a global partnership for development. But at current rates of progress, many of the goals will be missed in many parts of the world.

ENDS

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