G8 Nations Reach Deal on Debt Relief
SCOTT SIMON, host:
This is WEEKEND EDITION from NPR News. I'm Scott Simon.
A historic agreement today. The world's richest leaders have agreed to waive the loan debts of the world's poorest nations, mainly in sub-Saharan Africa. Finance ministers of the G8 countries settled the deal in London today. G8 leaders will meet in Scotland next month. NPR's Anthony Kuhn joins us from London.
Anthony, thanks for being with us.
ANTHONY KUHN reporting:
SIMON: What are some of the specifics and overall contours of the deal?
KUHN: Well, the deal, as Britain's finance minister, Gordon Brown, just told a press briefing, is that the G8 countries have agreed to cancel 100 percent of the $40 billion in debt that the 18 poor countries owed to the multilateral lending institutions, such as the World Bank, the International Monetary Fund and the African Development Fund, and this debt relief would take effect very soon after the agreement and it would free up about $1.5 billion a year that these 18 nations could then spend on health care, education and other basic needs.
SIMON: And what are some of the 18 nations? We mentioned sub-Saharan states, but there are also states in other parts of the world, too, aren't there?
KUHN: That's right. That's correct. These 18 countries are countries who have met certain basic standards to receive these loans in terms of transparency, of economic liberalization and African countries include countries such as Ethiopia and Tanzania and Uganda, and there are also some countries in Central America, including Honduras and Nicaragua. Now about 20 other countries could also apply for this if the meet these standards in the coming months and years.
SIMON: Anthony, what will this agreement mean to some of those institutions that lent the money a number of years ago?
KUHN: Well, that's been a key sticking point in the negotiations. If they lend out all this money and the funds aren't replenished, then that means that other countries won't be able to borrow from it in the future. Now the compromise that they seem to have reached is that instead of just writing this off the books that the G8 nations will help to replenish the funds, and to that end the US has apparently pledged up to $1.75 billion over the next decade to go to these lending institutions.
SIMON: And there have been some criticism for this debt forgiveness that have been expressed by some anti-poverty groups and some aid groups. Help us know some of the range of those disagreements, if you could.
KUHN: Yeah, well, one of their most basic points is they're saying that debt relief is just not enough. While this will free up, you know, 1.5 billion a year to help these nations with health and education, Britain's Africa commission says they need 25 billion a year to address poverty, and that too few nations are getting a debt relief. They say not just 18 but 62 nations need to get debt relief if we're to meet the UN's goal of cutting poverty in half by the year 2015. They also say that this debt that goes to Africa has gone to line the pockets of corrupt local rulers, that more money has been stashed by them in overseas bank accounts than they've received in aid, and that they've already gotten the equivalent of several aid plans but without much result.
SIMON: This plan is very much at the heart of how Prime Minister Blair sees his legacy, in a sense, the meaning of his administration now that he's in the third term.
KUHN: Yes, that's correct. He wants this to be part of his legacy, and it's interesting to note that, you know, the Africa issue has long been part of the Labour Party's agenda, ever since many of Blair's ministers were anti-apartheid activists in the 1970s. But he has bigger goals, which the US hasn't signed on for yet, and it'll have to decide on by Gleneagles next month.
SIMON: NPR's Anthony Kuhn in London. Thank you.
KUHN: Thank you.