HISTORIC PRESS RELEASE : Chancellor Gordon Brown and Clare Short Pledge $100 Million to Help the World´s Poorest Countries [June 1999]

The press release issued by HM Treasury on 9 June 1999.

Britain has now pledged $171 Million to Millennium Trust Fund

A $100 million British pledge to speed up the debt relief process and cut the debts of the world’s poorest countries has been announced today by the Chancellor Gordon Brown and Clare Short, Secretary of State for International Development.

The money has been pledged to the new £2,000 million Millennium Trust Fund, proposed by the Chancellor and Ms Short, which aims to fund a more ambitious framework for faster, wider and deeper debt relief.

It is proposed the new fund will be made up of:

• the funds of the existing HIPC Trust Fund, to which Britain has already pledged $71 million;
• a call to the world’s richest countries to increase their contributions (this includes the new $100 million pledge from Britain); and
• a call on the European Commission to contribute resources from the European Development Fund.

The Chancellor said:

“Britain has put forward proposals to write off at least $50 billion of debt by the end of the year 2000. We have led the way on the international stage in trying to unshackle the poorest countries from their unsustainable debt burdens. But is now time for us to take action.

“I hope this further $100 million pledge from the UK will encourage our international partners to make further pledges. The richest countries have it within their power to provide a better deal for poor countries and the world’s poorest people.”

Clare Short said:

“If we are to achieve the internationally agreed targets to halve world poverty by 2015 we need to make real progress with debt relief. This further pledge from Britain demonstrates our commitment to speed up the process of debt relief for those countries that are serious about reducing poverty.”

The Chancellor has proposed a write off of at least $50 billion of debt which will allow for quicker debt relief and for a significant reduction in the sustainability ratios. Britain has proposed:

• 150% of the net present value of debt/exports (known as the exports ratio). The figure is currently in the range of 200-250%; and
• 200% of the net present value of debt/government revenue (known as the fiscal ratio). This is currently set at 280%.

The Chancellor stressed that debt relief, poverty relief and economic development must go hand in hand. He said:

“When the debt burdens of the world’s poorest countries are lifted we want to see the money diverted to lift people out of poverty and used for investment in health and education. We want to see a new approach by the IMF and World Bank to see that this happens.”