Britain's Treasury chief Gordon Brown signed a debt relief agreement Friday with Tanzania that he said will save the African country US$74 million over 10 years.
Under the deal, Britain will pay part of Tanzania's debt to international creditors such as the World Bank and African Development Bank, said Tanzanian presidential spokeswoman Maura Mwingira.
The agreement was part of a new initiative Britain is leading to ease the foreign debt burden of poor countries.
"I am delighted that Tanzania is the trailblazer with this [agreement]," said Brown.
He said he was satisfied with the way Tanzania has used its foreign loans to improve education and health care.
During his Africa tour that began Wednesday, Brown has been building a case for boosting debt relief and aid to the poor.
Britain has made improving Africa's plight a priority for its presidency of the Group of 8 rich nations and EU this year. Presidency of the G-8 is for a calendar year, while Britain's presidency of the EU begins on July 1.
Brown is using his tour of Kenya, Tanzania, Mozambique and South Africa to renew calls for debt relief for the world's poorest countries, fairer trade and a massive increase in aid.
Part of his proposals is a so-called International Finance Facility to double aid to the world's poorest countries to US$100 billion a year.
Tanzania is the first beneficiary of the proposal.
The mechanism would raise funds on the international capital markets by issuing bonds, using future, legally binding donor commitments from rich countries as collateral.
In this way, Brown argues, international creditors will be able to substantially increase aid over the next few years and ensure poverty is halved in poor nations by 2015, a target set by the UN with support from much of its membership.
Rich countries would then have until 2030 to repay bondholders from their development aid budgets.
Key donor countries like the US and Japan have shown little interest in the International Finance Facility.
Tanzania already gets debt relief of US$140 million a year, under the World Bank and International Monetary Fund-backed Highly Indebted Poor Countries initiative.
Local and international aid groups in Mozambique issued a statement ahead of Brown's arrival there later Friday calling for nothing less than the "total and unconditional" cancelation of foreign debt held by the poorest countries.
The statement praised Brown's drive to step up aid, but noted that certain unspecified donor nations still hadn't fulfilled their pledges to help rebuild Mozambique after devastating floods in 2000 and 2001.