Rich nations move towards Africa debt relief deal

The Group of Eight rich nations edged closer yesterday to a historic deal that would wipe out $40 billion of debts owed by 18 of the world's poorest countries as part of a British-led drive to haul Africa out of poverty.

Britain, chairing the club of rich nations this year, has declared 2005 the year of Africa and is determined to seal an accord on debt relief and aid for the impoverished continent by the time G8 leaders meet in Gleneagles, Scotland, next month.

"The uniqueness of this deal is that so much would be written off almost immediately - more than 40 billion within a few weeks of the agreement," Britain's Gordon Brown said as G8 finance ministers hammered out the details in London. While Britain, Italy and the United States were upbeat on the prospects of a deal, Germany struck a discordant note.

"We will not come to an agreement here," German Finance Minister Hans Eichel told reporters. But he added that differences were narrowing.

Charities said any deal would fall short of 62 countries they say need to have their debts cancelled if there was any hope of achieving United Nations targets of halving world poverty.

"We certainly see it as a step forward but according to our analysis it still would provide 10 per cent of the debt relief that is needed to significantly reduce poverty by 2015," said Romilly Greenhill of ActionAid. The finance ministers, who met yesterday and continue their talks today, were also to take stock of their own economic problems, such as slow growth in Europe and Japan, record deficits in the United States and tension over China's currency policy.

Africa was, however, the main focus at the meeting of finance ministers from the US, Canada, Japan, Russia, France, Germany, Italy and Britain. UK finance minister Brown has personally championed the African cause.

"Our intention is that Africa is enabled and empowered to break free from the cycle of debt relief, poverty and economic under-development that has cost so many lives for so long," Mr Brown said in a television interview.