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DebtRelief2005 - New York Times Deal Is Reached to Drop...

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New York Times September 25, 2005 Deal Is Reached to Drop Debt of 18 Poor Nations By EDMUND L. ANDREWS WASHINGTON, Sept. 24 - Finance ministers from around the world reached agreement on Saturday on a plan to wipe out as much as $55 billion in debt owed by impoverished countries. The deal still needs to win support from the major shareholders of the World Bank, which would forgive a large portion of the outstanding loans, but American and European officials said they were confident the plan would win approval on Sunday. The agreement, which will initially affect about 18 countries, came after two years of grinding debate between the United States , Japan , Britain and most of the wealthy nations in Europe. "The breakthrough is that we now have a set of proposals that are supported by the whole international community," said Gordon Brown, the chancellor of the exchequer for Britain and the chairman of the International Monetary Fund's policy-making committee. If all goes according to plan, the 18 highly indebted low-income countries could be freed as early as the end of this year from the need to repay a total of about $1 billion a year in interest and principal. Though the nominal amount of debt at stake is about $55 billion, the actual cost of forgiving the debt immediately is closer to about $18 billion. Eventually, as many as 35 countries could qualify for debt relief and the total cost to wealthy countries would climb higher. The criteria for eligibility was one of the most difficult issues, with the United States, Japan and Germany adamantly opposed to opening the door to an ever-expanding list of nations. When the plan was first hammered out last summer by the United States and Britain, the idea was to make it available to countries that are currently categorized as "highly indebted poor countries." But fund officials said eligibility had to be based on a specific formula that would apply the same standards to all countries.
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The exact criteria remained unclear on Saturday, though Mr. Brown said it was based on
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DebtRelief2005 - New York Times Deal Is Reached to Drop...

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