The Group of Seven industrial nations cleared the way today for a new debt-relief plan that could lead to the write-off of $70 billion in loans owed by poor countries.
The terms of the deal, which is due to be approved by next weekend's summit of the G7 plus Russia in Cologne, are much more generous than existing relief for highly indebted poor countries (HIPC), which governments and debt-relief campaigners alike have criticized as inadequate.
"It will be faster, it will be deeper and it will involve more countries," U.S. Treasury Secretary Robert E. Rubin said of the new program.
British Finance Minister Gordon Brown said the cost of the plan if the relief were provided today in one lump sum -- the "net present value" of the deal -- rather than being phased in over many years would be about $27 billion, more than twice the cost of the present HIPC initiative.
He said 36 poor countries would be eligible for relief, up from 29 at present. "These countries could be eligible under the reform scheme for a total of $50 billion of debt relief. There was also agreement to write off a further $20 billion of ODA loans," Brown said, referring to official development assistance loans that are usually extended on concessional terms.
Brown said all the G7 members had agreed that the International Monetary Fund should sell part of its 103 million-ounce stockpile of gold reserves, worth about $27 billion, to pay for its share of the debt relief.
Germany in the past had fiercely resisted gold sales, but Chancellor Gerhard Schroeder threw his weight behind more generous debt relief earlier this year and Finance Minister Hans Eichel said today that Bonn was willing to go along with the sale of up to 10 million ounces of IMF gold.
The ministers -- from the United States, Japan, Germany, Britain, France, Italy and Canada -- also agreed that the global economy was mending well after two years of turmoil touched off by a financial crisis that engulfed Asia and spread around the world.