Blair: Let's wipe billions from third world debt

Tony Blair will use today's G8 summit of world leaders to call for billions of pounds of debt owed by the world's poorest countries to be written off.

Tony Blair will use today's G8 summit of world leaders to call for billions of pounds of debt owed by the world's poorest countries to be written off.

The Prime Minister will urge his colleagues to call on the International Monetary Fund and the World Bank to cancel the debt owed to them.

He will also demand that the international community abandons a plan to shut a key debt relief scheme that threatens to prevent war-torn countries such as Sudan from signing up. The appeal is expected to be backed by the United States, which will use the initiative to justify its calls for billions of pounds of debt racked up by Saddam Hussein's regime to be written off.

At the G8 summit in America's Sea Island that begins today, Mr Blair will submit proposals to increase the current $70bn (£38bn) of bilateral debt set to be written off through the Highly Indebted Poorer Countries (HIPC) programme. He will propose abolishing the "sunset clause" that would block new countries from entering HIPC if they have not met the entry criteria by the end of this year. The clause threatens to keep war-ravaged countries such as Sudan, Somalia, Liberia, Burundi, Ivory Coast, Chad and the Central African Republic out of HIPC.

The plans, drawn up by the Chancellor, Gordon Brown, and the International Development Secretary, Hilary Benn, include a one-off $1bn top-up for the HIPC trust fund. Treasury sources said the abolition of the sunset clause would take the debt written off from $70bn to about $100bn.

The UK and US have also discussed extending debt relief to loans from institutions such as the IMF, the World Bank, and the African Development Bank. The estimated cost of a 100 per cent write-off of all multilateral debt would be more than $1bn a year, and would take the total amount of debt to be written off well over the $100bn mark.

World leaders are facing pressure from campaign groups to deliver help to developing countries against the background of a mounting disaster in Sudan. Henry Northover, a policy analyst at the charity Cafod, said: "If the US is arguing that Iraqi debt should be cancelled because of Saddam Hussein, then the same applies to the Democratic Republic of Congo, Nigeria and other African states that have accumulated large debts under undemocratic regimes."