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G7 set to agree third world debt relief package

Diane Coyle
Friday 11 June 1999 18:02 EDT
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FINANCE MINISTERS from the Group of Seven leading industrial countries are due to agree a deal of debt relief for third world nations this weekend to be put forward to the leaders' summit in Cologne next weekend.

The Chancellor, Gordon Brown, said he was confident there would be an agreement to sell some of the International Monetary Fund's gold reserves so a more generous relief package could be funded. But campaigners remain concerned that UK proposals to reduce interest payments by the world's poorest countries will be watered down by other members of the G7.

An debt relief Oxfam report said: "The finance ministers are displaying all the integrity of used car salesmen."

A report yesterday from the House of Commons International Development Committee welcomed the proposals put forward by the Chancellor and Clare Short, international development minister, earlier this week. But the report said the G7 and IMF's "highly indebted poor countries (HIPC) initiative is "on the brink of failure". The MPs called on the finance ministers, meeting in Cologne today, to "dispel the inertia" and accelerate debt relief.

At this weekend's meeting the ministers are due to discuss another demand on their budgets; the cost of rebuilding Kosovo. They are also likely to hammer out terms with Russia for a package of IMF aid.

In addition the agenda will cover reforms to the international "financial architecture". Mr Brown was confident there would be an agreement on how to involve the private sector in solving future financial crises.

An agreement may also include the introduction of standard clauses in bond contracts that will make it easier for countries to reschedule debt.

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