WASHINGTON - September 27 - As the G7 Finance Ministers meeting to be held in Washington on October 1st nears, UK Chancellor of the Exchequer Gordon Brown yesterday committed the UK to pay 10% of the cost of canceling third world debt and encouraged the IMF's share to be financed by gold sales.
Jubilee USA Network today released the following statement on Brown's recent remarks on poor country debt cancellation:
Jubilee USA Network welcomes the recent debate within the G7 on impoverished country debt cancellation. Jubilee USA Network, its 70 US-based member organizations, and partners in the global Jubilee movement have been campaigning for the better part of the last decade for freedom from debt. Jubilee USA Network calls for 100% multilateral debt cancellation for all impoverished nations, without harmful economic conditions, and paid for using the resources of the IMF and World Bank.
As G7 Finance Ministers prepare to gather in Washington on Friday, October 1, we issue an urgent call to G7 nations to work in the spirit of multilateral cooperation and compromise to achieve a deal on 100% debt cancellation for impoverished nations at this meeting, or soon thereafter.
Each one of the G7 nations deserves credit for supporting debt cancellation initiatives in the past 5 years. Germany hosted the G7 summit in 1999, which led to bilateral debt cancellation from the G7 and additional debt relief through HIPC Initiative. France reportedly urged the United States government in June to embrace full debt cancellation for poor nations if it wanted support for Iraq debt cancellation. The UK's Gordon Brown has been a leader in the recent work for full debt cancellation and issued bold call to use the IMF's gold to cancel the debt at a meeting this summer at the Vatican. The U.S. Treasury department has spent the past several months working towards full multilateral debt cancellation now widely reported by the media. Canada has been a longtime supporter of debt cancellation. Italy and Japan should also be saluted for their efforts on these and related issues over the years.
In the coming week and beyond, G7 nations must work together to achieve a deal for 100% debt cancellation. Differences among the G7 have arisen on the question of how debt cancellation should be financed. Jubilee USA Network recognizes that the World Bank and IMF, very rich institutions, can easily afford to cancel poor country debt from their own resources. In particular, we urge the G7 to direct the IMF to sell some of its vast gold reserves in order to finance debt cancellation. This approach would not affect the IMF's ability to lend nor would it cost taxpayers in rich countries additional money. Unlike other possible resources within the institutions, the gold provides additional resources for impoverished nations while requiring the IMF to finance its fair share of debt cancellation. Recent studies show that there is enough IMF gold to finance both the IMF and World Bank share of the debt cancellation.
The choice to use IMF gold does not preclude the dedication of additional resources towards comprehensive development financing by G7 nations in the next year and beyond. It will be important, once debt is cancelled, to fully fund the fight against AIDS and the Millennium Development Goals. 100% debt cancellation will ensure that future resources dedicated to impoverished country development will be able to be effective and ensure that these additional resources are not simply siphoned back to creditors in the form of debt service.
UK Chancellor of the Exchequer Gordon Brown stated Sunday that the UK government would put up 10% of the cost of debt cancellation and he called on other governments to appropriate resources from their national treasuries to finance debt cancellation. We laud Brown for his commitment to 100% debt cancellation, but his call to finance debt cancellation through G7 government appropriations threatens to scuttle a deal on debt. Brown's commitment, though generous, is unnecessary considering the international financial institutions' vast resources.
Several G7 nations have been clear that they cannot support 100% cancellation if they must contribute more than they already do to the IMF and World Bank. We call on the Chancellor Brown, our own government, and all other G7 nations to negotiate in the coming week and beyond in order to reach points of compromise to accomplish 100% cancellation of impoverished nation debt. Financing through gold could be the best way to reach a deal in the immediate term as nations go through the longer process of identifying how to increase overall aid appropriations to meet development challenges.
All G7 nations embrace the principle of debt cancellation and the need for funds to fight poverty disease that debt cancellation frees up. No nation denies the critical development challenges that poor nations face and the need to fight the global AIDS pandemic. No nation denies the urgent need to meet human development goals. No nation denies that debt relief has been effective and has been used to fight poverty. We cannot delay; lives are in the balance.
The consequences of a long delay on 100% debt cancellation for impoverished nations are grave. In 1 month, 240,000 people die of AIDS and almost 1 million children will die of preventable diseases, in 2 months, almost a half million people will die of AIDS and 2 million children will loose their lives to preventable diseases. We know that interim debt relief has more than doubled poverty reduction expenditures in eligible countries. Do not delay. G7, cancel 100% of the debt now.
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