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Old 06-11-2005, 01:19 PM   #1 (permalink)
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debt write off

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and for the clicking impared:

Quote:
LONDON - The world's richest countries agreed Saturday on a historic deal to write off more than $40 billion of debt owed by the poorest nations.
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The debt relief package backed by finance ministers from the Group of Eight industrialized nations is part of a British-led effort to lift Africa out of poverty.

"We are presenting the most comprehensive statement that finance ministers have ever made on the issues of debt, development, health and poverty," said Britain's Treasury chief Gordon Brown. The agreement represents a "new deal between the rich and poor of the world," he said.

U.S. Treasury Secretary John Snow, who helped hammer out the deal, called it "an achievement of historic proportions."

Officials said 18 countries, many in sub-Saharan Africa, will benefit immediately from the pact to scrap 100 percent of the $40 million they owe to the
World Bank, the
International Monetary Fund and the African Development Bank. As many as 20 other countries could be eligible if they meet strict targets for good governance and tackling corruption, which could eventually boost the total debt relief package to more than $55 billion .

However, Britain, which holds the G8 presidency this year, faces further tough negotiations on another ambitious target of boosting international development aid by $50 billion a year. Britain hopes a second accord will be reached on this aid goal at G8 summit on July 6-8 in Gleneagles, Scotland.

Aid charities welcomed the package, but said at least 62 countries needed full debt cancellation.

"Tomorrow 280 million Africans will wake up for the first time in their lives without owing you or me a penny from the burden of debt that has crippled them and their countries for so long," said Bob Geldof, the anti-poverty campaigner who organized the Live Aid rock concerts 20 years ago. Those concerts raised millions of dollars for famine victims in sub-Saharan Africa, and Geldof is planning follow-up Live 8 concerts next month aimed at pressuring the G8 summit in Scotland to increase aid to Africa.

"We must be clear that this is the beginning and the end will not be achieved until we have the complete package ... of debt cancellation, doubling of aid, and trade justice," he said.

The debt relief proposal was put forward by Britain and the United States following talks in Washington last week between
President Bush and British Prime Minister
Tony Blair. It was made possible by a significant concession by the White House when it agreed the debt write off would not jeopardize future aid funding. Previously, Bush had insisted debt relief come out of existing aid packages.

The G8 countries pledged to provide additional funds to compensate the World Bank and African Development Bank in full for the assets written off. They also agreed to meet any shortfall that the
IMF could not cover from its own internal resources.

Brown said Britain will pay $700 million to $960 million over the next 10 years to fund the compensation package, while the U.S. will pay $1.3 billion to $1.75 billion. Germany would pay $848 million to $1.2 billion to offset future lost repayments to the World Bank and the African Development Bank.

"We are committed to meeting the full costs to the IMF, World Bank and African Development Bank," said a communique issued at the close of the meetings in London of finance ministers from the United States, Britain, France, Germany, Japan, Russia, Canada and Italy. "We will not jeopardize the ability of these institutions to meet their obligations."

The deal will initially scrap $40 billion owed by 18 nations eligible for debt relief under the Heavily Indebted Poor Countries Initiative, including Benin, Bolivia, Burkina Faso, Ethiopia, Ghana, Guyana and Mali. The initiative was launched by the World Bank and IMF in 1996.

A further nine countries owing $11 billion are expected to complete the program's targets for good governance within 12 to 18 months and would then qualify. To meet the good governance standard, the G8 want recipient nations to cut corruption, tackle fraud, free up their economies and liberalize trade.

Aid agencies say the deal will spare the 18 countries a total of between $1.5 billion to $2 billion a year in debt repayments, which Brown said must be spent on "health, hospitals, nurses, education, schools, teachers and infrastructure."

"We can expand health and education services with this relief," said Daudi Balali, the governor of Tanzania's central bank. "We will also be able to expand our infrastructure."

Britain has made tackling poverty in Africa and the developing world a priority for its G8 presidency. Blair's approach is three-pronged: increasing aid; eliminating debt; and pushing for fair trade.

The G8 ministers said they would strive for a successful conclusion of trade talks launched in 2001 that sought to slash subsidies, tariffs and other barriers to global commerce, and to use trade to help poor nations.

___

AP Business Writer Jane Wardell contributed to this report.
i'm actually kinda shocked. does this mean that the worlds richest contries do care? or is there a bigger issue behind it? whatever the case it sounds like good news for a whole lotta people. i just hope that their governments use this advantage for the better...
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Old 06-11-2005, 02:42 PM   #2 (permalink)
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Karby, this is an excellent topic. I believe this would get more considered responses in the Politics Forum. (We really aren't as fearsome these days )

Hopefully, a Mod agrees?
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Old 06-11-2005, 04:13 PM   #3 (permalink)
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Quote:
Originally Posted by Elphaba
Karby, this is an excellent topic. I believe this would get more considered responses in the Politics Forum. (We really aren't as fearsome these days )

Hopefully, a Mod agrees?
The discussion is already going on in there. Here, it can be a news story instead of a debate.
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Old 06-11-2005, 04:13 PM   #4 (permalink)
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How about we keep this post here....no one will ever see it in the Politics forum...

Anyway, this very well may have little to do with the other nations caring about the African nations. Debt relief for Africa will eventually lead to a better world economic climate. To put it simply, if more nations become developed, there will be more consumers for international trade. The World Bank (whose sole purpose is to aid development) wants to try to save these people to boost the world economy in the future.

If anyone wants to read more into this topic, I have a very long term paper that I can send you.
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Old 06-11-2005, 04:50 PM   #5 (permalink)
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there will always be ulterior motives that can be seen, but we don't know if they are the "major" factor. sure they would have considered that but im not too sure if thats the only reason they did this. Also writing stuff off as bad debts can be a good thing on its own. with insurance to cover those things.

Maybe however, they wanted to be kind. Help the little guy out. sure its not likely but you never know.

Now its up to the developing countries what to do with the extra $2bn a year. they are forced to spend it on infrastucture, which is good. They can avoid becoming consumerist if they want to. The key is that they need to want to. IF they want to become consumerist, well thats their own choice and you cant blame the developed world for that.
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Old 06-11-2005, 10:18 PM   #6 (permalink)
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In theory, I love it, I think it's really good, in the spirit of humanity and stuff.

My main concern is, the countries mentioned have really corrupt governments (as far as I know). I wonder what difference it will really make. For example, with the debt burde lifted, will govts. then be free to borrow money to spend on infrastructure, capital improvements, business, tech etc, or will it just go into the pockets of corrupt officials? Will any of this "trickle" down to the people?
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Old 06-12-2005, 08:05 AM   #7 (permalink)
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I expect the worst. Graft is a way of life.
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Old 06-12-2005, 11:41 AM   #8 (permalink)
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This kind of thinking (forgiving of debt) could catch on if it is a good thing. I wonder what the result would be if our government forgave the debt of all of our poorest citizens and gave them a fresh start. Better yet maybe also declare our national debt paid in full and let our government start with a clean slate and begin to act responsibly.
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Old 06-12-2005, 05:32 PM   #9 (permalink)
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Quote:
Originally Posted by flstf
This kind of thinking (forgiving of debt) could catch on if it is a good thing. I wonder what the result would be if our government forgave the debt of all of our poorest citizens and gave them a fresh start. Better yet maybe also declare our national debt paid in full and let our government start with a clean slate and begin to act responsibly.
That's ummm, interesting.

Quote:
What Is the National Debt?

The national debt consists of Treasury notes, T-bills, and savings bonds that were sold to raise cash to pay the ongoing operational expenses of the federal government. National debt held by the public consists of debt instruments sold to anyone other than a federal trust fund, such as the Social Security trust fund. Most federal debt held by the public is owned by state and local governments, pension plans, mutual funds, and individual retirement portfolios.
Link

The national debt is also money borrowed from government trust funds such as Medicare, the Highway Trust Fund and the Federal Employees Retirement System.

I'm not sure that bankrupting SS, Medicare, state and local governments, mutual funds, individuals, etc. would be deemed "responsible."
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Old 06-13-2005, 06:01 AM   #10 (permalink)
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Quote:
U.S. NATIONAL DEBT CLOCK
The Outstanding Public Debt as of 13 Jun 2005 at 01:29:18 PM GMT is:

$7,782,816,546,352

The estimated population of the United States is 296,308,020
so each citizen's share of this debt is $26,319.17.

The National Debt has continued to increase an average of
$1.64 billion per day since September 30, 2004!
I'm sure I have this all wrong, but don't the beneficiaries of SS, Medicare, state and local governments, mutual funds, as well as individuals also own this debt? What difference does it make if we decide not to pay ourselves back? Isn't it just transferring the money from one of our accounts to another?

I really have no idea how this debt business works. Is 7 trillion too much?, 14 trillion?, 28 trillion? If we can forgive other countries who owe the US money, why can't we forgive our own citizens as well? At what point does our currency become worthless?

Apparently the goal of our government is to pass on the debt to the next generation and so on. This will work just great if no one ever has to pay it off.
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Old 06-13-2005, 07:41 AM   #11 (permalink)
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Two points:

Personal debt is 'cleared off' when a person files for bankrupcy. All their assets are given to and distributed among their creditors by a legally appointed liquidator.

The payment of these national debts is being made by the G8 in return for the opening up of the African states' tading markets. This could cause further problems because the local workforce may find it difficult competing with their more developed contemporaries around the world. At the same time, it will force development of greater infrastructure, intra-country markets and other efficiency developments.

As for alterior motives, I see this as a huge opportunity for the west to improve its own security and to open up new markets for western goods.

Trade is the most developing activity a country can involve itself in, and giving this ability back to these nations benefits everybody in my view.
 
 

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