IMF writes off 18 poor countries' debt

Eighteen of the poorest nations will have their debts to the International Monetary Fund (IMF) wiped out after rich countries bridged differences on Saturday that threatened a pact first signed this summer.

Leaders of the Group of Eight (G8) nations pledged at a July meeting in Gleneagles, Scotland, to cancel all debt owed to the international institutions by the world's poorest states, an agreement roughed out by their finance ministers the month before.

But some smaller European countries like the Netherlands were worried the G8 would not stump up the extra cash needed and that the commitment would undermine the existing resources of the World Bank and IMF.

Faced with the possible collapse of the deal at this weekend's annual meetings of the two institutions in Washington, the G8 on Friday promised additional money would be available, overcoming the smaller countries' objections.

"The world has come together," said British Finance Minister Gordon Brown who has personally championed the debt write-off and chairs the IMF's steering group, the International Monetary and Financial Committee.

"Agreement has now been reached on all the elements of the debt deal," he said, adding that the plan would be in operation by the end of the year.

World bank shareholders were expected to follow the IMF's lead on Sunday (local time) and also cancel the 18 countries' - most of them African - debts to it.

Under the plan, US$40 billion of debt to the international institutions will now be written off. A further nine countries could become eligible in the future and total relief could rise to US$55 billion.

African nations welcomed the deal but wanted to ensure that there would be no extra strings attached to receiving the money, and called for more nations to become eligible.

Source: China Daily