Group of Eight finance ministers agreed last weekend to write off more than $40 billion in debt owed by the world's poorest countries. The agreement is a critical first step in efforts to help lift these nations out of grinding and enduring poverty. The deal is only a beginning, however. Success will depend on a package of initiatives that will include increased aid and a more level playing field in trade. Most important is the need to follow the words with action. The world's richest nations should follow through on their promises.
Britain, the host of this year's G8 meeting, has made debt relief the cornerstone of the annual leaders' summit that will be held early next month in Scotland. Chancellor of the Exchequer Gordon Brown has made the issue a personal cause (a move that will no doubt strengthen his hand in the fight to succeed British Prime Minister Tony Blair). Months of difficult negotiations yielded a meeting in which the ministers were, according to Mr. Brown "united with a shared purpose."
Debt relief is a priority for developed and developing nations alike, but how that is best achieved, and more importantly, how poverty can be eliminated are still disputed. The billions of dollars owed by the world's poorest countries are a crushing burden, and lifting it is urgently needed. The agreement reached last weekend immediately erases some $40 billion owed by 18 of the Heavily Indebted Poor Countries (HIPC), the most desperate countries, to international financial institutions such as the International Monetary Fund and the World Bank. The deal will save them about $1.5 billion a year in debt repayments.