Nielson set to unveil debt relief plan

Date: 14/10/1999

By Simon Taylor

EU GOVERNMENTS are set to respond positively to a European Commission plan to find up to €1 billion to ease the debt burden of some of the world's poorest countries.

But they will push for a larger portion of the money to be targeted at heavily-indebted African countries by directing funds to the African Development Bank (ADB).

Development Commissioner Poul Nielson is due to unveil the proposal, which will take a three-pronged approach to easing the debt burden of the world's least developed countries, next Wednesday (20 October).

The largest share of money would be used to cancel €550 million in debts owed directly to the Union, with a further €150 million spent on rapid relief and €200-300 million donated to the World Bank's Trust Fund for international debt relief.

But member states are expected to argue that more money should be provided to help cancel debts held by the ADB. This is seen as a priority because, unlike the other multilateral lending agencies, it has only limited scope to raise extra funds itself.

Officials believe there is flexibility in the Union's development budget, thanks to savings resulting from lower demand for money from the Union's Stabex programme, which compensates African, Caribean and Pacific (ACP) countries for changes in the value of commodity exports, and political instability in several African countries which has prevented them taking advantage of EU development funds.

Under the terms of the Union's agreement with the 71 ACP countries, the latter must approve any change in the use of funds. The EU is planning to discuss this at this week's meeting of the EU-ACP assembly in the Bahamas and officials say they are confident the ACP countries will sign up to the Commission's plan.

EU Governments are set to respond positively to a European Commission plan to find up to €1 billion to ease the debt burden of some of the world's poorest countries.