G8 to cancel African debts

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The finance minister of the G8 met this past weekend and agreed to cancel the debts of 18 poor but well-governed nations around the world. The nations whose debt was cancelled include Benin, Bolivia, Burkina Faso, Ethiopia, Ghana, Guyana, Honduras, Madagascar, Mali, Mauritania, Mozambique, Nicaragua, Niger, Rwanda, Senegal, Tanzania, Uganda, and Zambia. Nine other countries are likely to qualify for debt cancellation under the plan in the near future. The guidelines for relief eligibility are those set up by the World Bank and International Monetary Fund in the Heavily Indebted Poor Countries Initiative of 1996. It is unclear whether extra payments pledged by rich countries would cover the full amount of payments that would have been made to the World Bank, the International Monetary Fund, and the African Development Bank over the term of the deal. Additionally, concerns were raised that the amount of money involved is really very small - $40 billion in debts of the countries eligible for the deal - and that much more needs to be done for poor nations around the world. Those advocating debt relief maintained that the deal agreed to over the weekend should be accompanied by extra aid to the countries involved. One organization mentioned a figure of $25 billion per year in extra aid. Germany and Japan expressed worries that the plan would be seen by the poor nations involved as a reward for reckless borrowing, but their concerns did not ultimately affect the deal.