UN Secretary General calls for 100 per cent debt cancellation

United Nations Secretary General Kofi Annan has made a powerful appeal to the leaders of the G8 countries to cancel outright the debts of the poorest countries. The call came in a strongly-worded letter to Mr Mori, Mr Clinton, Mr Blair and the other G8 leaders as they prepare to meet for their annual G8 summit on the remote Japanese island of Okinawa (July 21 – 23).

The letter, which proposes a new deal on debt, puts further pressure on the G8 to dramatically improve their debt package after a year of delays: "People all over the world will be following your meeting in Okinawa with intense interest and expectation".

Mr Annan's intervention will be welcomed by leaders from developing countries, who will meet the G8 for an unprecedented 'Debt summit' in Tokyo on July 20, the eve of the G8 meeting.

In the frank and radical letter, Kofi Annan proposes a new deal on debt:

• The total cancellation of all the debts owed by the poorest countries, including debts owed to the World Bank and IMF, who have so far rejected the call for 100 per cent cancellation
• Relaxing the criteria so that extra countries, such as Nigeria, are eligible
• A debt arbitration process to balance the interests of creditors and sovereign debtors, and introduce greater discipline into international borrowing and lending.

The current G8 debt package will cancel, on average, only one-third of the debts of 41 countries. Since the promise was made over a year ago, not one country has received any debt cancellation Annan writes: "We all recognise that there are no simple solutions to the debt problem. But without some such new initiatives as these we will remain trapped in the current impasse."

Mr Annan expressed his support for a new deal on debt, where debts would be wiped out in return for pledges by debtor nations to spend the money on basic healthcare and education. "Donors have long since agreed in principle that debt relief is essential... meanwhile in Africa, the world's poorest region, 40 per cent of government revenues are now being allocated to servicing a total debt of some $350 billion - to the detriment of health, education and other essential social services."

Earlier this year, 40 African countries met in Nigeria and pledged to use any resources from debt cancellation to fight disease such as malaria and AIDS. The current G8 package has been designed so that debt cancellation is not given until IMF structural adjustment conditions - which take years to implement - are met.

Jubilee 2000 Director, Ann Pettifor, said: “The Secretary General is speaking for millions around the world in stressing the urgency of this crisis. His impatience is justified. Before they retreat to an island for their summit meeting, the G8 leaders must respond to his call for a new deal on debt.”