July 17, 2000
Italy plans to cancel $6 billion in debt owed by 62 developing countries and intends to ask other wealthy nations to do the same, its Foreign Ministry said Friday.
The debt relief plan, which stems from an agreement reached last summer, completely cancels the debt of Uganda, Ethiopia, Mozambique, Angola and 37 other developing countries to Italy.
The relief for all countries comes in various forms. Some countries will get partial debt relief combined with aid packages, while others will get only debt relief. Aid money will total about $2 billion.
Italian Foreign Minister Lamberto Dini said Italy is the first Group of Eight member to cancel debt. His government, Dini said, will push G-8 partners to follow its lead at this week's summit in Okinawa, Japan (Associated Press/CNN.com, 14 Jul).
Since last year's G-8 summit, debt forgiveness has experienced "slow acceleration," Time magazine reports. Last week, the US House of Representatives approved $238 million in debt relief. US President Bill Clinton has said it is not enough but faces a reluctant Congress (Joshua Cooper Ramo, Time, 24 Jul).
US Treasury Secretary Lawrence Summers is pushing for more debt relief from the United States, calling it a "moral imperative." Debt relief, he added, "is not charity," but what is the toughest financial institutions do when they make bad loans. According to Summers, "debt reduction clears the way for new private investment so [indebted] countries can begin to grow" (Adam Zagorin, Time, 24 Jul).
Nicaragua is calling with increasing strength for cancellation of its foreign debt, which now exceeds 6.3 billion, Inter Press Service/TerraViva reports. The demands picked up after a recent International Monetary Fund and World Bank announcement that they would forgive neighboring Honduras' debt. Nicaragua's debt is currently 12 times its yearly exports, and debt servicing consumes 25% of the national budget, taking away funds that could be spent on education and health, Nicaraguan sources say (Inter Press Service/TerraViva, 14 Jul).
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