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.
Will he benefit from the deal?
"I can confirm that the G8 finance ministers have agreed a 100 percent debt cancellation for the Heavily Indebted Poor Countries (HIPC)," British Finance Minister Gordon Brown said at the end of a two-day meeting in London.
Britain's Chancellor of the Exchequer Gordon Brown (right) speaks with International Monetary Fund Managing Director Rodrigo de Rato on Saturday
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.
More can qualify
Nine further countries would become eligible for 100 percent debt relief for an additional $11 billion over the next 12 to 18 months, Brown said.
Thereafter 11 nations would receive similar debt cancellation of $4 billion, bringing the total amount of debt relief to $55 billion.
"We are conscious of the abject poverty, of the relentless and unyielding poverty that so many countries and individuals face," Brown said. "We have been driven forward by the urgent need to act."
South Africans suffer from poverty as well.
Former South African President Nelson Mandela had said the need for a deal was "urgent" in a letter sent to the G8 members.
"I hope you will do everything within your power to ensure your meetings... will finally conclude in a truly historic agreement for 100 percent debt cancellation," he wrote.
Eichel: "historic" deal
Debt relief as a way to end chronic poverty in Africa is a core issue for British Prime Minister Tony Blair in the run-up to the G8 summit at the Gleneagles resort in Scotland between July 6 and 8.
Group photo after the meeting (from left): World Bank President Paul Wolfowitz, German Finance Minister Hans Eichel, Russian Finance Minister Alexei Kudrin, US Secretary of the Treasury John Snow, Japanese Finance Minister Sadakazu Tanigaki, Britain's Chancellor of the Exchequer Gordon Brown, Luxembourg Prime Minister and Finance Minister Jean Claude Juncker, International Monetary Fund Managing Director Rodrigo de Rato, Italian Finance Minister Domenico Siniscalco, Canadian Finance Minister Ralph Goodale, European Economic and Monetary Affairs Commissioner Joaquin Almunia and French Finance Minister Thierry Breton.
France, Germany and Japan backed debt relief for a smaller number of countries based on a series of criteria. France and Germany have also put forward a proposal to tax commercial aviation fuel to raise funds for development in Africa.
Despite earlier reluctance, German Finance Minister Hans Eichel described the deal as "historic" and added that his country agreed to participate after sound financing had been worked out.
Eichel said Germany would contribute about 700 to 950 million euros to the deal. He added that oil producing nations would have to do their part to help shoulder the costs as poor countries suffer especially under rising oil prices.
Oil trust fund
The ministers also agreed to set up a trust fund that will help nations survive shocks in oil prices and other commodities.
"We're also setting up today a trust fund to deal with countries that are affected by commodity like oil price shocks," Brown said. "And we're inviting voluntary contributions from the oil producing states and other countries to support countries facing commodity and other shocks."