G7 fails to reach deal on debt relief

WASHINGTON - The Group of Seven economic powers on Saturday failed once again to agree on how to free Africa from debt and poverty.

Aid agencies had wanted the rich countries to make good on their pledge to help rid the world's poorest countries of their crippling debt but ministers once again could not decide on the best way to pay for this.

Their final statement after a Saturday meeting went no further than thanking the International Monetary Fund for a study on how its gold reserves could be used to help fund 100 per cent debt relief and promising more discussion.

"There was complete silence from the G7 on the sale of IMF gold. Yet the IMF has clearly said the gold can be sold to help cancel poor countries' debt," said Jonathan Hepburn, policy adviser for Oxfam International.

"How many children have to die before these seven men in suits develop a sense of urgency?"

In a report prepared for the G7 meeting in Washington, the IMF said an overall sale of about 13 to 16 million ounces of its 103.4 million ounces of bullion could be handled by the market without significant difficulty.

Britain, the current holder of the G7 presidency, has declared 2005 a make-or-break year for Africa and says there is no chance of meeting a United Nations goal of halving world poverty by 2015 without stumping up money now. 

UK finance minister Gordon Brown broke off from election campaigning at home to press his G7 colleagues to back his gold sales plan.

But the United States is opposed.

Snow told the IMF policy committee on Saturday selling gold stocks to pay for debt relief was the wrong approach.

"So whatever the merit of the argument might be, it's not going to pass," Canadian Finance Minister Ralph Goodale told Reuters in an interview on Friday.

Nor does President George W. Bush's administration back Brown's other idea -- an International Finance Facility (IFF) that would double cash for developing countries by issuing bonds against rich countries' future aid budgets.

The G7 statement simply said ministers had discussed a pilot of the scheme currently being run to raise money for immunization of African children.

France's proposal to levy a small tax on airline tickets, say around one euro or one dollar per ticket, to pay for aid, also failed to win support.

Ahead of the meeting, British Treasury officials played down hopes of a deal but are conscious time is running out before G8 leaders' summit in Gleneagles, Scotland, in July.

"The politicians are cutting it very fine. 2005 has the potential to be a breakthrough year and for nothing to have happened yet smacks of dangerous brinkmanship," said Anna Taylor of Save the Children.

"If all we get from the G8 is piecemeal debt packages and reannouncement of existing aid commitments, the world can be rightfully angry at the failure of its leaders to make child poverty history."

- REUTERS