Finance ministers of the Group of Seven countries said on Saturday that they would forgive as much as 80 per cent debt under a joint World Bank-Fund initiative to help the highly indebted poor countries (HIPCs).
The World Bank and the IMF had initially hoped for debt forgiveness of as much as 90 per cent, but the idea met with a cool response from the major do-nors who were inclined to set the ceiling at 67 per cent.
The Group of Seven decision is a compromise which clears the way for swift implementation of the plan, with each potential candidate for debt forgiveness being dealt with individually.
The ministers look forward to the implementation without delay on a case-by-case basis, US treasury secretary Robert Rubin told reporters after a five-hour-long closed-door meeting with his counterparts from Canada, France, Germany, Italy, Japan and the United Kingdom.
The HIPC initiative will tackle an estimated $ 7.7 billion debt burden, much of which is borne by countries in Africa.
The World Bank will contribute $2 billion to the initiative, the IMF will put in $1.2 billion and other regional banks are expected to contribute $ 2.1 billion.The rich countries debt relief component is expected to amount to $2.5 billion.
The Bank chief had earlier predicted that the debt relief package could begin functioning as early as this year. ble>