Call to suspend disaster nations’ debts

BRITAIN’s Chancellor of the Exchequer Gordon Brown yesterday released details of proposals for the suspension of debt repayments by countries hit by the Asian earthquake.

The scheme, to be discussed by the Paris Club of major creditors next week and by a meeting of finance ministers of rich nations early in February, could save the worst-hit countries up to £1.6 billion (€2.25bn).

Mr Brown said he was “confident” of winning the support of countries such as the US for the moratorium, put forward by Britain in its role as president of the G8 group of industrialised countries for 2005.

He also outlined proposals to add Sri Lanka to the list of heavily-indebted countries to receive 100% relief on debts to multilateral institutions such as the World Bank and International Monetary Fund.

Also he made clear that emergency assistance must be followed by long-term help for reconstruction and should not detract from efforts to help poor countries in Africa, a key priority for Britain’s presidency.

Mr Brown is due to launch a “new Marshall Plan” for the developing world tomorrow, with a package of assistance on aid, trade and debt relief designed to transform the prospects of African nations.

Explaining his ideas, Mr Brown said: “Our proposal is that, with immediate effect, the Paris Club should expect no debt repayment from afflicted countries.

“That would then lead to an analysis of the needs of these countries, with the possibility of some debt relief, at the same time ensuring that the money goes to the people and areas in greatest need.”

Finance ministers from the G7 nations - the G8 minus Russia - will discuss the proposal at a meeting in London on February 4-5.

Britain also wants to see an offer of emergency assistance from the IMF and a “substantial” donation of funds for reconstruction from the World Bank.

“Therefore, the $2bn figure which has been quoted as the world’s contribution to deal with both the problems of first aid and reconstruction will rise very substantially, and Britain is going to play its part in making its contribution to that enhanced figure,” Mr Brown said.