WASHINGTON - A deal to erase billions of dollars of debt for poor countries cleared an important hurdle Saturday, winning the endorsement of the International Monetary Fund’s steering committee. The agreement would forgive an estimated $40 billion worth of debt for at least 18 poor countries — most of them in Africa — owed to the IMF, the World Bank and the African Development Bank.
The World Bank and IMF did not want the debt plan to impair their ability to provide aid and sought assurances the rich nations would put up the money to cover the loan repayments lost when the debts are written off. Finance officials from the Group of Eight countries — the United States, Japan, Germany, France, Britain, Italy, Canada and Russia — pledged on Friday to “cover the full cost to offset dollar for dollar” the loan repayments that would be lost.
Adolf Robertson of the IMF stated, "The G-8 reassurances are very important as we want to make sure we can succesfully underwrite massively profitable, and completely unaffordable, new loans to those 18 countries as soon as possible."