[mgj-discuss] G7 supports 'as much as' 100% cancellation; Jubilee USA reacts

[Robert Weissman]

This means the spring IMF/World Bank meetings will be far more important 
than usual ...

Dear friends,

The G-7 Finance Ministers have just concluded their meeting in London and released a statement. 

In short, we can celebrate a small step forward -- today for the first time, the G-7 as a group officially indicated the need for "as much as 100% multilateral debt relief." This represents progress and the first time such language has been used by the G-7 as a whole. Congratulations to all for your efforts over the past few years -- this is a victory we should acknowledge our contributions to.

Of course, with any announcement by creditors and governments, the devil is in the details. Though the G-7 have agreed in principle, they have not indicated specifics and have pushed discussion on which countires will be eligible, how it will be financed, conditions, etc. to the April Spring meetings of the IMF/World Bank. We have our work cut out for us -- to insist that this be actual debt cancellation, that it be for all impoverished countries not just the HIPC countries, and that it come without devastating economic conditions attached. Our struggle is far from over and we will need your continued support to ensure this commitment turns into a reality. Moreover this discussion does not include questions of odious, illegitimate, or debt owed by middle-income countries -- all issues that Jubilee USA is committed to building campaigns around in the medium term.

IMPORTANT: There will be stories on the outcome of the G-7 meeting in tomorrow's and Monday's papers and online. If you see such stories in your local papers, it is critical to respond with a letter to the editor. You can use talking points drawn from the press release below -- the critical thing to emphasize is the though this is an encourageing first step (that Jubilee USA has campaigned for for years), there must be full cancellation for all impoverished countries without harmful conditions, and that action must take place by April.

See below for Jubilee's reaction to media as well as the official statements by the G7.

Best
Neil Watkins
Jubilee USA

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JUBILEE USA NETWORK
For Immediate Release – February 5, 2005

Contact: Neil Watkins, 202-421-1023 (mobile)

Jubilee USA Network Reacts to Outcome of G-7 Finance Ministers Meeting in London

G-7 Agreement on Need for 100% Cancellation Encouraging, but Plan Must Come without Harmful Conditions, Apply to All Impoverished Nations

G-7 Response on Tsunami-Affected Countries’ Debts ‘Completely Inadequate’

WASHINGTON – As G-7 Finance Ministers concluded their meeting in London today, Jubilee USA Network was encouraged that learn ministers have indicated their willingness to provide as much as 100% multilateral debt cancellation, a long time demand of the Jubilee USA Network. But the group cautioned that the plan must be broadened and that critical questions about the initiative must be addressed as the upcoming April IMF/World Bank spring meetings near.

The communiqué released by the G-7 today indicates that the G-7 have agreed in principle to “provide as much as 100% multilateral debt relief” and that the G-7 asked IMF Managing Director Rodrigo de Rato to bring proposals on how to finance debt cancellation for discussion at the April spring meetings of the IMF and World Bank in Washington.

“Though we are encouraged to hear that for the first time the G-7 have officially embraced the call for 100% multilateral debt cancellation, we insist that this plan must be actual cancellation – not just debt service relief, that it apply to all impoverished countries, and that it must come without devastating economic conditions,” said Neil Watkins, National Coordinator of Jubilee USA Network. “We will be pressuring our government to see these commitments turned into action in the coming months.”

Jubilee USA Network indicated several key benchmarks that must be addressed as discussions on debt cancellation proceed leading into the April IMF/World Bank spring meetings, including:
1.	100% cancellation. There must be full (100%) debt stock cancellation for impoverished nations. Proposals put forward by the UK and Canada would not cancel debt stock, but only relieve debt service payments for 10 years.
2.	Leave no country behind. The G-7 communiqué indicates that there “will be a case-by-case analysis of HIPC countries” for consideration for 100% cancellation. It is critical that debt cancellation apply to all impoverished nations, not simply those that qualify for the IMF/World Bank’s HIPC Initiative. 
3.	No economic conditions on debt cancellation. Debt cancellation must come without externally imposed conditions on impoverished nations. Civil society in impoverished nations must be empowered to ensure accountability in the use of funds released by debt cancellation.
4.	IMF/World Bank Must Pay Their Fair Share. The IMF can sell gold and raise more than $35 billion to finance cancellation of IMF and World Bank debt. The World Bank can mobilize at least $17 billion in accumulated and future profits for debt cancellation. These sources of finance must be tapped if there are to be enough resources to extend cancellation to a broad range of countries.

Though encouraged by the developments on multilateral debts owed by impoverished nations, Jubilee USA Network characterized the creditors’ response to calls for debt cancellation for nations affected by the Tsunami – a moratorium on payments for one year -- as “completely inadequate.”

“People in the US and elsewhere showed their generosity to nations affected by the Tsunami with huge contributions, but clearly the G-7 governments have decided not to show such goodwill when it comes to these nations’ debts. The G-7 chose a short-term moratorium over cancellation, which is a failure of leadership,” said Watkins.

Jubilee USA Network noted that the discussions on multilateral debt cancellation for impoverished nations in the G-7 are only the first step on a much longer journey towards freedom from debt. Jubilee USA points out that the discussion in the G-7 now only applies to a very particular type of debt (multilateral) for the very poorest nations and the Network believes that debt cancellation and freedom from debt domination is urgent for nations across the global South for many types of debts and its work will reflect that broader agenda in the months and years ahead.
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G7 Finance Ministers Conclusions on Development
London, February 5, 2005
[See also Statement of G7 Finance Ministers and Central Bank Governors] 

1. We reaffirm our commitment to help developing countries achieve the Millennium Development Goals by 2015.[1] We will make particular efforts in Africa, which on current rates of progress will not meet any of the Millennium Development Goals by 2015. This report sets out the steps we plan to take.

2. At the International Conference on Financing for Development in Monterrey on 21-22 March 2002, the international community agreed on a partnership for development, in which developing countries are primarily responsible for their own economic and social development, supported by the international community. The range of international support agreed at Monterrey included action on: a more open world trade system; increased aid effectiveness; absorption capacity; increased levels of aid; and debt relief.

3. In order to make progress on social and economic development, we believe it is essential that developing countries put in place the policies for sustainable development. Sound, accountable and transparent institutions and policies are the basis for sustained economic growth and poverty reduction. Increasing fiscal transparency is essential and a priority for developing countries is to tackle corruption, which is a significant barrier to growth, private sector development, investment and poverty reduction. A number of other measures, such as establishing a credible legal framework, need to be taken to reduce or eliminate impediments to private investment, both domestic and foreign.

4. It is crucial that the international community improves the effectiveness of aid. In particular bilateral and multilateral donors need to: harmonise their operational procedures; align aid behind country-owned priorities; and provide for measurable results. Donors must also: focus their aid on poverty reduction; enhance efforts to untie aid, based on DAC principles; and deliver aid in a more predictable way. We look forward to agreement on practical steps to improve aid effectiveness at the Paris OECD DAC High Level Forum in March.

5. Progress on the Doha Development Agenda is critical to global economic growth and poverty reduction.  We must ensure that the Doha Round delivers substantial benefits to developing countries.  We encourage both developed and developing countries to play an active role in the negotiations to ensure that an ambitious outcome is achieved.  We recognise that developing countries face particular problems and need the flexibility to sequence reforms to their trade policies. We call on the IFIs to develop proposals for additional assistance to countries, consistent with debt sustainability, to ease adjustment in these economies, based on a systematic analysis of transition costs and consistent with country-owned development strategies, so they can increase their capacity to take advantage of more open markets. 

6. HIV/AIDS and malaria undermine growth in developing economies and progress towards the Millennium Development Goals.  In addition to treatment, care, and the development of health systems, research on vaccines must be accelerated.  We reaffirm our commitment to the Global HIV Vaccine Enterprise, and will consider how to increase public research.  We will also explore the use of advance purchase commitments to drive private sector investment.

7. The Enhanced HIPC Initiative has to date significantly reduced the debt of 27 countries, and we reaffirm our commitment to the full implementation and financing of the Initiative.  Moreover, individual G7 countries have gone further, providing up to 100 per cent relief on bilateral debt. However, we recognise that more still needs to be done. We are agreed on a case-by-case analysis of HIPC countries, based on our willingness to provide as much as 100 per cent multilateral debt relief. We also ask the IMF and the World Bank to look at the issue of debt sustainability in other low-income countries. To finance the relief of debts owed to the IMF and to enable the Fund to continue to play a role in the poorest countries, the Managing Director has stated that he will bring forward proposals at the Spring Meetings, covering the Fund's gold and other resources and in an orderly way.  We look forward to his proposals. For the relief of debts owed to the World Bank and African Development Bank we will work with their management and shareholders to bring forward proposals for agreement at the Spring Meetings to achieve this without reducing the resources available to the poorest countries through these institutions. We also call on non-Paris Club creditors to provide at least their share of HIPC debt relief, and we ask the IMF to report on progress at the Spring Meetings.

8. In addition to debt relief, we recognised at Monterrey that a substantial increase in ODA and other resources will be required to assist developing countries to achieve the internationally agreed development goals and objectives, including those contained in the Millennium Declaration. We acknowledged the efforts of all donors whose ODA contributions exceed, reach or are increasing towards the Monterrey targets. We emphasise the importance of an ambitious replenishment of IDA 14.

9. As we prepare for decisions at the G8 Summit in Gleneagles we agree a work programme on: the IFF and its pilot, the IFF for immunisation; some of the revenue proposals from the Landau Report brought forward by France and Germany which could also refinance the IFF; the Millennium Challenge Account; and other financing measures; so that decisions can be made on the constitution of and participation in a financing package to achieve the Millennium Development Goals.

Note

[1] As Endorsed by Heads of State and Government in the UN General Assembly on September 8, 2000.

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Source: HM Treasury


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Statement of G7 Finance Ministers and Central Bank Governors
London, February 4-5, 2005
[See also G7 Finance Ministers Conclusions on Development] 

G7 Finance Ministers and Central Bank Governors met in London.  We are conscious of our responsibility to respond positively to the challenges and opportunities of the global economy.  Recognising the need for greater and wider partnerships, we held an informal meeting with key global economies and continued our productive dialogue with the Chinese authorities.

Since our meeting in October the economic cycle has matured and global growth moderated, but is expected to remain robust for 2005.  Risks are balanced, though global imbalances remain. Inflationary pressures remain subdued.  We recognise that each of our countries must play its part to support long-term sustainable global growth: key priorities are that the United States has committed to fiscal consolidation; Europe and Japan to further structural reform. We agreed on the importance to global growth of an ambitious result at the Hong Kong WTO ministerial with a view to concluding the Doha Development Round, including financial services.  We committed to provide support to build the infrastructure and capacity to enable developing countries to benefit from trade opportunities and called on the IFIs to play a major role in this.

We discussed medium-term energy issues and the risks of current oil prices. Market transparency and data integrity is key to the smooth operation of markets. We welcomed concrete actions in improving data provision to oil markets and encouraged further work, including on oil reserves data, by relevant international organisations.  The Extractive Industries Transparency Initiative can increase fiscal transparency and help improve the use to which oil revenues are put. We call on international institutions to work with oil producing countries to ensure a climate conducive to investment.  We recognised the importance of raising medium-term energy supply, of energy efficiency, and of the importance of technology and innovation in ensuring energy security.

We reaffirmed that exchange rates should reflect economic fundamentals.  Excess volatility and disorderly movements in exchange rates are undesirable for economic growth.  We continue to monitor exchange markets closely and cooperate as appropriate.  In this context, we emphasise that more flexibility in exchange rates is desirable for major countries or economic areas that lack such flexibility to promote smooth and widespread adjustments in the international financial system, based on market mechanisms.

Flexible economies with efficient labour markets are key to sustained economic success.  In an increasingly integrated global economy, bringing more people into the labour market would raise living standards and play an important part in increasing the sustainability of public finances, as populations age. We reviewed our experience in this area and are committed to taking further reforms.

We reiterated our condolences and sympathies to all those directly affected by the tsunami disaster.  We reviewed the substantial response to these tragic events and discussed reconstruction needs on the basis of the preliminary assessment by the IMF and World Bank.  For affected countries that request it, we agreed exceptionally to defer debt payments up to the end of 2005 (consistent with national laws), without payment of interest during this period, and to promote this in the Paris Club. We will review at our next meeting the need for further assistance based on the full needs assessment.

We discussed the challenges of meeting the Millennium Development Goals and the opportunities in the coming year and have published our conclusions separately.

We also agreed to meet our counterparts from the Broader Middle East and North Africa region at the time of our next meeting.

The IFIs must adapt to meet the challenges of the modern global economy.  We undertook to support World Bank and IMF management in their strategic reviews of their institutions.  We look forward to discussing this topic further at the Spring Meetings.

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Source: HM Treasury


LTEs

Neil Watkins
National Coordinator
Jubilee USA Network
(202) 783-0129
www.jubileeusa.org