Top finance officials of the Group of Eight industrialized nations kicked off a meeting in London Friday to try to clinch agreement on unprecedented debt relief for the world's poorest countries.
The world's poorest countries are burdened by mounting debt
Britain, which is hosting the talks as rotating chair of the G8, has set alleviation of poverty in the world's poorest countries as one of its main political goals this year and has lobbied hard to convince finance chiefs in Canada, France, Germany, Italy, Japan, the United States and Russia to agree to a major debt relief package.
"I am satisfied that there is the political will of the richest countries to move forward," British Finance Minister Gordon Brown, who has spearheaded the initiative, said in a televised interview with BBC.
"It's debt interest payments that prevent many poor countries from investing in health and education and I believe we could have the biggest debt write off the world has seen," he said ahead of the meeting, which is seen as a precursor to next month's G8 summit in Gleneagles, Scotland.
British Chancellor of the Exchequer Gordon Brown
Earlier this year, Brown launched the so-called "Marshall Plan for Africa" aimed at wiping out multilateral debt for the poorest nations and doubling annual development aid to 100 billion dollars by 2015.
The will is there
Under the two-pronged plan, Britain has set out to convince the world's wealthiest countries to cancel the 80-billion dollar multilateral debts owed by poor countries to the International Monetary Fund, the World Bank and the African Development Bank.
Two children look on in envy while the older of the three proudly shows a 20 Rand bill (about 5,5 USD ) in front of their house in Kanyiso, South Africa
"There is a will to come to an agreement," Brown said. The difficulty is trying to find common ground for writing off the debt and funding the loss of debt interest payments by the international institutions.
At a meeting earlier this week in Washington, British Prime Minister Tony Blair and US President George W. Bush said they were close to completing their proposal for canceling 100 percent of debt for the world's poorest countries.
According to the New York Times on Friday, Britain and the US have agreed on a system to relieve 18 of the poorest nations, mostly in Africa, of combined debt worth 16.7 billion dollars (13.66 billion euros).
Germany doubts compromise
A definite agreement among all G8 members, however, has not been reached, and according to German government officials, who have rejected a 100 percent debt write-off as unfeasible, the main sticking point is the method of financing.
Poverty and famine go hand-in-hand in much of Africa
Unlike the US-British plan, Germany, France and Japan are expected to back debt relief for just five countries and have pegged the extent of cancellation to specific criteria such as "good government." The Europeans have also called for a finance proposal based on taxing commercial aviation fuel – a plan the US is reluctant to support.
When asked about the possibility of finding a compromise at the two-day London meeting, German deputy finance minister Caio Koch-Weser said he "doubts" whether that would happen.
"I doubt it, but I do not exclude it," he said. "We are working to bring our positions closer together, the German said in London.
Under the Brown-inspired proposal, which has at least tentative approval from several countries, the IMF could sell off a portion of its massive gold reserves to cancel the debt owed. While the IMF has acknowledged the feasibility of the sale, the US has objected, saying that offloading the reserves would destabilize the markets.