The Group of Eight nations plan to shoulder 70.19 percent of debt cancellation costs for the world’s poorest nations, with the share for Japan set at 13.17 percent, international financial sources said Sunday.
The world’s most powerful nations are considering canceling up to $42.5 billion that 38 heavily indebted poor countries, mostly in Africa, owed the World Bank as of the end-of-2004 cutoff date, beyond which accumulated debt will not be covered by a relief plan, the sources said.
With the plan, Japan’s share of the costs would total $5.5 billion and that for the United States would come to $8.5 billion.
Finance ministers from the Group of Seven nations — the G8 minus Russia — are expected to confirm the cost-sharing arrangement during a meeting Friday in Washington.
They are also likely to sound out non-G8 donor countries at the annual gatherings of the World Bank and the International Monetary Fund over the weekend, also in Washington, on whether they can cover the remaining debt cancellation costs.
The debts involve those owed to the International Development Association — a World Bank Group institution that provides long-term interest-free loans and grants to the poorest of the developing countries — the IMF and the African Development Bank. Of the three, debts to the IDA are by far the largest.
The G7, which groups Britain, Canada, France, Germany, Italy, Japan and the United States, is expected to focus on the size of the debts to be waived, which is calculated to be between $27.1 billion as of the end-of-2003 cutoff date and $42.5 billion as of the end-of-2004 cutoff date, according to the sources.
The G7 and other donors, such as oil-producing nations and Scandinavian states, are likely to discuss the issue based on the G8’s planned division of the debt-canceling costs, which will be used to replenish the IDA for the waived credits.
Unless donors outside the G8 agree to the G8’s request of sharing the burden, the G8 members would be forced to increase their respective portions, the sources said.
The G7 and other donors are also expected to discuss how they will pay for the canceled debts, the sources said, citing differences in budgetary rules among donor countries.
According to the G8 plan, Britain’s share is 13.82 percent, the second highest after the United States at 20.12 percent. If the rate is applied to the $42.5 billion in debts, Britain would shoulder $5.8 billion in debt cancellation costs.
Germany ranks fourth with an 8.97 percent share, followed by France with 6.17 percent.
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