Saturday, June 11, 2005

At long last:
The finance ministers of the world's eight wealthiest nations agreed Saturday on a deal for immediate 100 percent multilateral debt relief totaling $40 billion (33 billion euros) for 18 of the world's poorest countries...

The G8, comprising Britain, Canada, France, Germany, Italy, Japan, Russia and the United States, agreed to immediately write off $40 billion of debt owed by 18 countries to the World Bank, the International Monetary Fund (IMF) and the African Development Bank.

The 18 nations include Benin, Bolivia, Burkina Faso, Ethiopia, Ghana, Guyana, Honduras, Madagascar, Mali, Mauritania, Mozambique, Nicaragua, Niger, Rwanda, Senegal, Tanzania, Uganda and Zambia.

They are the first to qualify for eligibility for a debt relief joint initiative backed by the three financial institutions. The HIPC initiative offers debt relief to the world's most impoverished nations that agree to undertake economic reform.
For those who haven't been following the story, the 18 HIPCs essentially spend so much of their income paying off former debts -- often taken out, furthermore, by previous non-democratic regimes -- that they have little to no income left to combat the health and productivity losses which frequently result from abject poverty.

The only thing I would add: as great as the debt write-off is in theory, the specific nature of the "economic reforms" in question will determine its true value. After all, should the structural reforms turn out to be just as inhibitive as the debt payments, then today's celebratory announcements will seem risible in retrospect.

Perhaps that sentiment will prove inappropriately cynical, but the U.S., the World Bank and the IMF have all insisted on ill-advised reforms in the past (think Argentina). Here's to hoping that this time they prove far more judicious.


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