Finance Minister Ralph Goodale today announced a debt relief proposal that he says will ease the burden of debt for the world’s poorest countries by substantially increasing both the amount of relief available and the number of nations eligible for debt relief assistance.

Goodale also called on other donor countries to support this Canadian initiative and provide similar debt relief for developing nations.

Under this initiative Canada will contribute approximately $172 million over the next five years to the International Development Association of the World Bank and the African Development Fund. This relief will be immediately open to the 15 countries that have completed the Heavily Indebted Poor Countries Initiative, a multilateral debt reduction strategy, as well as four other nations participating in the World Bank Poverty Reduction Support Credit program. A further 37 countries are potentially eligible for benefits.

The government says strong governance and human rights considerations are built into this proposal, as is a link to the achievement of the Millennium Development Goals in 2015. This contribution represents 4% of all debt payments to these institutions, or Canada’s traditional share of global multilateral assistance.

In addition, Canada will consider how best to finance further relief of debts owed to the International Monetary Fund by eligible countries. Canada calls on donors to agree on the need to provide further IMF debt relief and to identify the best way to finance this cost.

“Canada’s proposal focuses on relieving the immediate burden of debt by reducing debt-servicing obligations, and provides deeper relief than existing initiatives by effectively paying 100% of debt-servicing payments coming due between now and 2015,” said Goodale, in a release. “Canada is also willing to explore various options to finance further debt relief through the IMF. However, if these options negatively affect the Fund’s financial position or disrupt world gold markets, Canada calls upon donor countries to pay for 100 per cent debt-service relief on IMF claims directly.”

Today’s announcement was made in advance of the February 4-5 meetings of the G-7 Finance Ministers and Central Bank Governors, which is expected to include further discussions on international debt relief.

http://www.fin.gc.ca/news05/05-008e.html