After two days of intensive talks in London, the world's wealthiest nations agreed Saturday to write off $40 billion of debt owed by the poorest nations.
The sweeping decision immediately cancels the debt owed by 18 heavily-indebted countries to the World Bank, the International Monetary Fund and the African Development Bank. The agreement had long been sought by impoverished nations, particularly in Africa.
The discussions were chaired by Britain's top financial official, the Chancellor of the Exchequer, Gordon Brown, who praised his colleagues for reaching the agreement ahead of a G8 summit next month in Gleneagles, Scotland.
"We meet preparing for the G8 summit at Gleneagles, recognizing that this is not a time for timidity, but a time for boldness, and not a time for settling for second best, but for aiming high, " Mr. Brown said. "And I can confirm that the G8 finance ministers have agreed a 100 percent debt cancellation for the heavily-indebted poor countries."
Mr. Brown adds, the plan also allows for up to 20 other nations to become eligible for debt relief, if they meet certain good governance tests.
"Because we aim to avoid a repetition of unpayable debt in the future, we have also agreed to tough disciplines for the future, and we have asked the World Bank and the International Monetary Fund to prepare a report for us on improving transparency on all sides, and to intensify the rooting out of corruption, so that funds are guaranteed to be used for the purpose of poverty reduction," he said.
The decision on debt cancellation represents the first victory for Britain in its three-pronged approach to making poverty history in Africa. Gordon Brown acknowledges that much work remains on boosting relief funds and on dismantling present trade barriers that greatly affect exports from developing countries.
"We said that 100 percent debt relief is possible for the poorest countries, that we could double aid by 2010, that we can secure greater trade justice for the world, and we are moving closer to achieving this as we progress towards Gleneagles," continued Gordon Brown.
Prime Minister Tony Blair plans to visit Germany, France and Russia next week as he continues to sell the plan and win over more support.
The leaders of the world's richest nations will gather next month in Scotland, and the African anti-poverty package is expected to be the primary focus.