$40 billion debt deal approved
Published 9:00 pm Saturday, September 24, 2005
WASHINGTON – A deal to erase billions of dollars in debt for poor countries cleared a major hurdle Saturday, winning the endorsement of the International Monetary Fund’s steering committee.
The breakthrough was announced by Gordon Brown, Britain’s chancellor of the exchequer and chairman of the IMF’s policy-setting panel.
Brown said negotiators reached agreement on “all elements” of the debt cancellation. He said the IMF’s 24-member executive board would meet soon to formally approve the deal.
“We worked very hard over the last few days, as well as over the last few months, to try to bring people to agreement on the proposals,” Brown said late Saturday.
The agreement would forgive an estimated $40 billion in debt for at least 18 countries – most of them in Africa – owed to the IMF, the World Bank and the African Development Bank.
As many as 20 other countries could be eligible if they meet certain conditions. That would push the total amount of debt cancellation to more than $55 billion. The cost would be spread out over decades.
The endorsement by the IMF steering committee came one day after the Group of Eight major industrial powers made a firm pledge to underwrite the plan, a commitment intended to overcome the biggest obstacle to approval by the lending institutions.
The deal still needs to be approved by the World Bank, a major lender to poor countries. The World Bank and IMF annual meetings continue today, and U.S. officials predict swift approval of the debt cancellation deal.
