Drop the Debt Campaign triggers $50 billion proposal from Gordon Brown

The UK Chancellor, Gordon Brown, announced a new drive to reduce the debts of the world's poorest countries on the 19^th February. The initiative followed a week of media success by Jubilee 2000 – following the launch of Jubilee 2000's Drop the Debt campaign by the music industry and Muhammad Ali's visit to Britain as international ambassador. Gordon Brown's initiative was welcomed by the Jubilee 2000 campaign, however they urged him to go much further.

Mr Brown made his announcement the day before the meeting of the G7 Finance Ministers in Bonn, Germany. It follows announcements by German Chancellor Gerhard Schroeder who called for “radical debt reduction” and Al Gore who announced “significant new US funding for poor, highly indebted nations”.

Gordon Brown said his initiative was in response to the visit to London of U2 singer Bono and boxing legend Muhammad Ali, who both swung behind the Jubilee 2000 campaign to cancel the unpayable debts of the world's poorest countries by the end of 2000. Bono announced the music industry's support for the campaign at the Brit Awards on Tuesday (16 February) and Muhammad Ali, who also attended the Brits, visited Brixton on Wednesday in his capacity as International Ambassador of Jubilee 2000.

In his announcement, Gordon Brown made a new proposal, which would lead to a total debt reduction of $50 billion for the most indebted countries. This is around double the level of relief currently expected under G7 proposals for the Heavily Indebted Poor Countries initiative. However, total debts of the 52 countries identified for assistance by Jubilee 2000 amount to $371 billion – over seven times the level of debt relief the Chancellor is proposing. Significantly larger sums than $50 billion will need to be cancelled if debt service levels are to be reduced far enough to be truly sustainable in human development terms. Only then will new resources be released that can be invested in health and education.

In addition to his announcement, the Chancellor and the International Development Secretary Clare Short have written a joint letter to the President of the World Bank, James Wolfensohn, and the Managing Director of the IMF, Michel Camdessus. In the letter they have emphasised the need to conduct a fundamental review of the HIPC initiative. They urge two important improvements: to shorten the qualifying period along the lines of the lines of the German proposal, and to increase the level of debt relief by adjusting the debt export ratio and the fiscal criteria. They have also stressed the importance of seeking the views of developing countries and NGOs, and involving external reviewers in order to “ensure the credibility of the review and to elicit fresh ideas.” This is as close as the British government is likely to come to saying that they do not have confidence in the IMF and World Bank, acting alone, to deliver a review of sufficient depth and quality to bring an end to the debt crisis. They add that, “public expectations of progress in solving the debt problems facing the poorest countries are high.”

Ann Pettifor, Director of Jubilee 2000 Coalition, said:

“The Chancellor is responding directly to the international movement of Jubilee 2000 and the specific appeals of Bono and Muhammad Ali – and that's great news. $50 billion wiped off the debt mountain of $371 billion is a good start. But there's still a long way to go. People are being crushed by this debt – and Gordon Brown's move only lightens the load a little.”