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U.S. AND BRITAIN LEAD G8 TO HISTORIC DEBT RELIEF AGREEMENT
With strong leadership from the United States and Great
Britain, the G8 (Group of Eight industrialized countries) reached a
groundbreaking agreement to relieve the debt of developing countries. President
Bush and Prime Minister Blair led the way in brokering the historic deal, which
was then accepted by the finance ministers of the other six G8 countries
(France, Germany, Italy, the Russian Federation, Japan, and Canada).
The agreement will erase over $40 billion in debt for 18 of the world’s poorest
countries immediately, most of which are in Africa, and contains an option to
erase the debts of up to 20 additional countries. Industrialized countries
agreed to pay back the debts to the international lending institutions to which
they are owed, which include the World Bank, the International Monetary Fund,
and the African Development Bank.
Debt puts poor countries into a downward spiral of poverty, often forcing them
to choose between interest payments and investments in key engines of
development, such as education, public health, agriculture, energy, and
micro-enterprise. However, without greater commitment to these sectors,
developing country economies falter and basic quality of life remains low.
Nongovernmental organizations, celebrities, activists, and developing country
governments all greeted the new agreement with enthusiasm and a small measure of
skepticism. They agreed that the agreement was a giant step forward in the
effort to end poverty, but said that the G8 must continue to focus on increasing
development assistance, which will be a main discussion point at the upcoming
Summit (July 6-8). They also worried that the debt repayments from
industrialized countries might come at the expense of future development money,
which would hurt poor countries. To spur development and help people around the
world lift themselves out of poverty, the G8 must remain steadfast in its
commitment to development as it fulfills the historic debt relief agreement.
Updated June 17, 2005
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