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Britain offers new debt relief challenge

Britain is planning a new effort to help poor countries reduce their huge debts by offering to pay off 10 percent of the total owed to international agencies and challenging other nations to follow suit, said Chancellor of the Exchequer Gor-don Brown.

In an address scheduled for yesterday to an advocacy group called the Trade Justice Movement, Brown planned to repeat a proposal that the IMF should revalue its vast gold reserves, currently priced at a tenth of their market value, and use the proceeds to cancel some Third World debt, according to the a text of his remarks published on Saturday in The Guardian and later confirmed by the Treasury.

The issue is rising once more on the international agenda because a previous mechanism for debt relief, set up in 1996 by the World Bank and the IMF, is to be renewed in December for two years. James Wolfensohn, the president of the World Bank, said on Friday in Washington that the White House had devised a plan to cancel some Third World debt, Reuters reported. Senator John Kerry has also pro-mised to lead efforts to cancel the debts of impoverished countries if he is elected in November.

Brown's proposal is significant because it comes just days before the annual meetings of the World Bank and the IMF in Washington. The finance ministers of the G7 major industrial nations, including Brown, are also to meet just before those gatherings.

"What we hope is that this will break the logjam that has been there for some time," said Brendan Cox, a spokesman for Oxfam, a nonprofit group that has urged accelerated moves to cancel Third World debt.

"If others follow suit it will be a massive turning point in efforts to end the burden of international debt," Cox said.

Brown was scheduled to tell the meeting of anti-debt campaigners yesterday that Britain will set aside the equivalent of US$180 million a year to pay off 10 percent of the money owed by 32 countries to international lenders, notably the World Bank and the African Development Bank.

"Because the poor cannot wait, we intend to lead by example by paying our share of their payments to the World Bank and the African Development Bank," Brown was planning to say. "We do this alone today, but we urge you to use your moral authority to urge other countries to follow suit so that poor countries can look forward to a future free from the shackles of debt."

Brown will also argue that the debt owed to the IMF could be cut by a revaluation of the fund's gold stocks, currently worth US$8.5 billion when valued at US$40 per ounce. The market price for gold is now more than US$400 an ounce.

"Because we cannot bury the hopes of half of humanity in the lifeless vaults of gold, the cancellation of debt owed to the IMF should be paid for by the better use of IMF gold," Brown planned to say.

Some estimates put the total debt owed by the poorest countries at around US$200 billion.
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