World Bank and IMF write off debts for impoverished nations
the recently concluded annual meeting of the World Bank (wb) and the International Monetary Fund (imf) in Washington agreed to implement the debt cancellation proposals of the g8 summit at Gleneagles, Scotland. The agreement to write off us$57.5 billion debt to ease the burden on impoverished nations will benefit 18 countries, 14 in Africa and four in South and Central America. The time for imf debt cancellation is the end of this year while for the World Bank it is July 2006.
There has been disappointment at the deal not coming into effect immediately as it will prevent the Zambian Government from providing additional aids drugs this year to almost 100,000 infected people. The agreement also excludes 20 impoverished nations whose debt position is said to be sustainable. Also debt repayment to significant creditors such as Inter American Development Bank hasn't been taken into account.
The rich countries have to agree on details of extra funding for the wb to ensure that the debt cancellation does not undermine its financial support for poorer countries in future as about 20 per cent of the wb's new lendings to these countries is recycled repayments on earlier loans.
Immediately after this, attention shifted to global trade. The Bank President, Paul Wolfowitz said that "Even more important than increased aid and debt forgiveness is the need for a comprehensive trade agreement." Finance ministers of Brazil and Nigeria called on the rich nations to drop their barriers to agriculture exports and end farmers aid if they are serious about helping the poor in Third World countries.
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