G8 ministers back Africa debt deal

LONDON, England -- Finance ministers from the world's wealthiest nations have agreed to an historic accord to cancel $40 billion worth of debt owed by the world's poorest nations.

The Group of Eight (G8) ministers -- meeting for a second day Saturday in London -- backed a deal that includes an immediate scrapping of 100 percent of the debt belonging to 18 countries to the World Bank, the International Monetary Fund and the African Development Bank.

As many as 20 other countries could be eligible if they meet strict targets for good governance and tackling corruption, leading to a total debt relief package of more than $55 billion.

British Finance Minister Gordon Brown called the accord a "new deal" for relations between the rich and the poor countries.

Finance ministers from the United States, Britain, Japan, Canada, Russia, Germany, Italy and France agreed to the package ahead of a G8 summit July 6-8 in Gleneagles, Scotland.

Hopes of an accord on debt relief were raised Friday with reports of an agreement between the United States and Britain on writing off debt owed by the 18 countries.

The countries are Benin, Bolivia, Burkina Faso, Ethiopia, Ghana, Guyana, Honduras, Madagascar, Mali, Mauritania, Mozambique, Nicaragua, Niger, Rwanda, Senegal, Tanzania, Uganda and Zambia.

British Prime Minister Tony Blair -- current G8 president -- had demanded that poor countries' debts be cancelled and their aid doubled.

The debts would be written off by the lenders in an effort to allow the debtor countries to start fresh, get their books in order and eventually be able to borrow again for economic development, health, education and social programs, rather than simply to repay existing loans.

The G8 ministers discussed other issues Saturday, including concerns about the effect of high oil prices on the global economy, U.S. deficits, reform of Japan's financial sector and poor economic growth in European.

Chinese officials have been included in order for U.S. and European ministers to urge them to the float the yuan, which many see as being overvalued, leading to floods of cheap imports.

U.S. Treasury Secretary John Snow is urging his Chinese counterpart Jin Renqing to scrap the yuan's exchange rate peg to the U.S. dollar.
(CNN.com)