Countries such as Chad, Malawi, Tanzania and Zambia will see reduced payments this year; and a total of 41 countries will be included in the plan. But even as further pledges of money were extracted, serious doubts emerged as to whether all the governments involved could fulfil their promises.
In order to finance debt relief worth up to $100bn (pounds 62bn) for the "highly indebted poor countries" (HIPC) initiative - which will cost the IMF, World Bank and other official lenders around $27.5bn in terms of the discounted present value of the write-offs - a $2bn cash gap had to be filled by yesterday. The UK made a fresh contribution of $50m on top of the $171m announced earlier by Chancellor Gordon Brown and Clare Short, the minister for international development. Thanks to this gesture and intensive late- night discussions, four other G7 countries had topped up the HIPC fund. A last-minute $300m whip-round left only another $200m-300m to find for the World Bank's portion of the package. The US had earlier pledged $650m. In addition, the European Union is expected to contribute around $700m from unused money in the European Development Fund. Japan and Canada yesterday remained the only G7 members to have resisted the pressure.
However, despite the success of the Chancellor's arm-twisting, World Bank and IMF officials remained doubtful about whether the debt initiative would be properly funded. And there are fears at the bank that, despite G7 assurances, one serious obstacle is the US Congress. It has to approve not only the US contribution but also must vote on the IMF's revaluation of part of its gold reserves. A US Treasury source admitted that gaining approval for the US pledge would be very difficult, if not impossible during a presidential election campaign. The IMF said yesterday it hoped for speedy Congressional approval for its gold transaction. Anthony Boote of the IMF's treasury department said: "The message from these meetings is very clear: we have to get on with providing debt relief quickly. We would expect member countries to proceed with their contributions on the same timescale."
Campaigners expressed fears that the struggle to get more money to the very poor was not yet over. Jessica Woodroffe, of the World Development Movement, said: "Governments recognise the critical importance of debt relief for the world's poorest countries. The next critical step is to make sure that the money is delivered."