[G8] Debt deal won't rid poverty

From Finance 24
London - A G8 deal to scrap billions of dollars of debt owed by the poorest countries must be matched by huge increases in aid and an end to European and US agricultural subsidies in order to eradicate poverty, experts said on Sunday.
"Of course debt cancellation can be only part of any serious attempt to make poverty history," The Independent newspaper said.

The Group of Eight industrialised countries on Saturday struck a landmark deal to immediately write off all multilateral debt owed by 18 countries, most of them in Africa, amounting to $40bn (€33bn).

But they failed to agree to a call to double annual development aid to $100bn dollars by 2015.

While hailing the debt cancellation as a "milestone", The Observer newspaper cautioned:

"So far, the money on the table only goes part of the way."

"While the focus has been so exclusively on debt, the impact of unfair agricultural subsidies has received too little political attention.

"The Common Agricultural Policy does great damage to Africa, locking its farmers out of European markets.

"Meanwhile, excess European production is sold on world markets, depressing world food prices.

"The United States is no better... Reform the CAP -- and remove US farm subsidies -- and poverty might really become history," the paper said.

The G8 finance ministers communique released at the end of their two-day meeting called for a "timetable to eliminate all trade-distorting export subsidies in agriculture".

The debt relief decision by Britain, Canada, France, Germany, Italy, Japan, Russia and the United States concerns money owed to the World Bank, International Monetary Fund and African Development Bank.

Max Lawson, debt expert for British charity Oxfam, said the cancellation was worth only $2.0bn a year at most for poor countries.

"G8 leaders need to urgently pick up the pace, respond to the calls of millions of campaigners around the world and put up an extra $50bn of aid to fund the fight against poverty."

Debt relief has assumed a higher profile as the world struggles to meet the UN's Millennium Development Goals calling for the proportion of the world's population living on less than a dollar a day to be halved by 2015.

Eighteen countries, some in Latin America, will be the first to benefit from what British finance minister Gordon Brown Saturday called "the most comprehensive statement that finance ministers have ever made on the issues of debt, development, health and poverty".

They are Benin, Bolivia, Burkina Faso, Ethiopia, Ghana, Guyana, Honduras, Madagascar, Mali, Mauritania, Mozambique, Nicaragua, Niger, Rwanda, Senegal, Tanzania, Uganda and Zambia.

Nine other countries will become eligible for 100% debt relief totalling an extra $11bn over the next 12 to 18 months, after which 11 nations could receive similar debt cancellation of four billion dollars -- bringing the total amount of debt relief to $55bn.