Group of Eight debt relief proposal

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In welcoming the Group of Eight finance ministers' recent debt relief proposal, IMF Managing Director Rodrigo de Rato said it "goes a long way toward helping Heavily Indebted Poor Countries escape a heavy debt burden." De Rato also welcomed the G-8 proposal for a new trust fund to help poor countries deal with shocks. The proposals will be put to the Annual Meetings of the IMF and World Bank in September.

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De Rato welcomes Group of Eight proposal on debt relief

IMF Managing Director Rodrigo de Rato welcomed the proposal by the finance ministers of the Group of Eight (G-8) countries to relieve the debt of the poorest countries. "This proposal goes a long way toward helping Heavily Indebted Poor Countries (HIPCs) escape a heavy burden," he said in a statement after attending the meeting in London June 10-11.He said the IMF will examine the details and implementation of the G-8 proposal and work with its members toward an agreement.

The proposal, which is to be put to the Annual Meetings of the IMF and World Bank in September, could lead to the cancellation of all outstanding debt to the IMF, the World Bank, and the African Development Bank for eligible HIPCs, allowing them to accelerate poverty reduction and boost their ability to achieve the Millennium Development Goals. The countries' debts would be cancelled once they have reached the HIPC initiative's completion point, meaning that they have implemented key policy reforms, maintained economic stability, and adopted and implemented a poverty reduction strategy for at least one year.

Currently, 38 countries potentially qualify for assistance under the HIPC initiative, 27 of which already receive debt relief under HIPC. If the G-8 proposal is adopted by the member countries of the IMF and the World Bank, 18...