Hilary Benn welcomes agreement on debt relief: World Bank Development Committee agrees 100% relief for poorest countries

25 September 2005

The final hurdle to secure 100% debt relief for the world’s poorest countries was leaped today with the decision by the World Bank’s Development Committee to accept the original proposal made by the G8 Finance Ministers and agreed by the International Monetary Fund Committee (IMFC) yesterday.

Speaking in Washington DC where he was representing the UK at the Autumn meeting of the World Bank’s Development Committee, the International Development Secretary, Mr Hilary Benn said:

“I am delighted that the World Bank’s Development Committee has agreed to support the G8’s debt cancellation proposal and asked the Bank to proceed with arrangements for implementation.

“This is a very important decision. A generation ago there was no debt relief for developing countries, people said it was impossible to do anything about it. Then people fought for and won the HIPC [Heavily Indebted Poor Countries’] Initiative and now we have a debt cancellation agreement that is going to write off a hundred per cent of the debts owed by the poorest countries to the World Bank, the International Monetary Fund and the African Development Bank.

“What it is going to do is to give those countries additional and predictable finance which is going to help them to train and employ doctors, and nurses and teachers, buy drugs to save lives and build classrooms to get children into school.

“It shows, in this special year for development, that there is an unprecedented commitment to take action, to help developing countries and their people to improve their lives.”

Today’s announcement follows the positive decision made by the committee of the International Monetary Fund (the IMFC) yesterday to back the proposal for 100% debt write off. The UK was represented on the IMFC by the Chancellor, Gordon Brown who also holds the position of chairman.

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The Secretary of State gave interviews to UK media outside the World Bank building after the Development Committee meeting:

BBC World Service Andrew Walker: What’s the timetable for the World Bank’s idea, is it coming into effect in June of next year?

HB: That’s the working plan, for implementation in the middle of next year, but the other thing I would say is that Paul Wolfowitz said to the Committee that this is something that they want to get on with urgently, that was a very strong commitment from him to the political support that has been given to him by the ministers of the IMFC.

Guardian Larry Elliott: Are all the objections from the smaller countries now overcome, no additional finance, problems for IDA, 3 yrs commitment for a 40 year plan, have they been smoothed out?

HB: Yes I think they have because the Committee has agreed the communique which says it supports the proposal and wants to see it implemented, I think the G8 Finance Ministers’ letter, offering unprecedented commitments, backing up what the G8 had said, in saying ‘we are committed to dollar for dollar compensation’, has demonstrated that we are all committed to IDA and its future success and not just the G8 countries but others are making clear commitments so that there are the resources to compensate IDA and make sure that we can pay for what we’ve agreed today. So we see real progress here this weekend and that’s why I’m delighted that the Committee has made this decision today.

LE: We’re not going to be back in this position in 3 yrs time when the current commitment runs out? Will we back into negotiations again?

HB: There’s a clear commitment from everybody who spoke, everybody around the table, that this is a long term commitment to maintain the viability of IDA and to pay for the cost of this debt cancellation which will be, at the point it happens, immediate and irrevocable.

Independent Phil Thornton: You are obviously very pleased about what has been agreed so far but it has been the UK’s position, that, at least in principle, you are keen to extend debt relief to even more countries. Will that effort continue?

HB: This is part of an ongoing process. As I said, a generation ago there was no debt relief, then HIPC came and we got agreement on this, one stage at a time, and we’ve got to go away and implement this but the continuing search to make sure that countries have the resources they need in order to improve people’s lives will go on and this year we have given it a very big push.

PT – We understand that a number of countries, including Belgium, Holland and Norway have raised concerns. Is it true that even until this morning, as the Chancellor said, it was ‘on a knife edge’? And what were the arguments that brought it round today?

HB: There’s been a lot of very intense discussion. And I think that those countries should take credit for having pushed to see the nature of the commitments and the product of that was the G8 letter that was issued on Friday night and I think those countries can be proud about what they have achieved and it’s the G8’s original commitment to put this proposal forward and the support that we now have from all the members of the Development Committee has allowed the Development Committee to express its support, and as I say, crucial to say to the Bank get on with implementing it.

For more information, call Vickie Sheriff, DFID press office, on 07768 921 383 or 020 7023 0950.

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