HISTORIC PRESS RELEASE : * Cut the Debt * Boost the Aid * Give a Billion * Sell the Gold – Chancellor Gordon Brown and Clare Short unveil four point plan to help the world´s poorest countries [March 1999]

The press release issued by HM Treasury on 3 March 1999.

A four point plan to help relieve the debts and aid poverty reduction programmes in the world’s poorest countries was unveiled today by the Chancellor Gordon Brown and Clare Short, Secretary of State for International Development.

At a meeting in Downing Street, with representatives of the faiths, the Chancellor stressed that to improve the lives of people in the poorest countries required a mobilisation of the world community.

The Chancellor and the Secretary of State announced a four point plan:

CUT THE DEBT

A target for committing ourselves by the end of the year 2000 to reducing third world debt by a massive $50 billion. This reduction could be achieved by changes to the IMF/World Bank’s Heavily Indebted Poor Countries (HIPC) initiative to bring faster, deeper and wider debt relief.

BOOST THE AID

A call to the developed countries to increase its aid flows to poor countries to $60 billion by the year 2000 to help in social, health and education programmes to reduce poverty.

GIVE A BILLION

A challenge to non-governmental organisations to increase their aid to $1 billion by the end of the year 2000. The Government will be helping through Millennium Gift Aid which will allow charities to claim tax relief on donations of 100 Pounds to support educational and anti-poverty projects in the world’s poorest countries.

SELL THE GOLD

Supporting the sale of $1 billion of IMF gold to fund enhanced debt relief through the HIPC initiative.

The Chancellor said:

“The UK will go into the Millennium with targets to increase debt relief, international development assistance and charitable giving to the world’s poorest countries. Together, these proposals can go a long way towards helping to eliminate poverty in the developing world.

“But this will require a mobilisation of the world community – international organisations, governments in the developed and the developing world, charitable organisations and individuals.

“This will be a true partnership in action – a Millennium Challenge for all – so that as we enter the new century we take a major step towards wiping out unsustainable debt and poverty with it.”

NOTES TO EDITORS

1. Background on each of the four points of the plan: CUT THE DEBT; BOOST THE AID, GIVE A BILLION AND SELL THE GOLD are attached.

CUT THE DEBT

A UK Target For Reducing Third World Debt By $50 Billion By The Year 2000

Last week the Chancellor announced that the British government would be pressing for a new debt relief package in the run up to the Millennium. His proposals, if agreed to by the major countries, would involve a commitment by the end of 2000 to reduce the debt burden of the world’s poorest countries by $50 billion.

This massive reduction in the debts owed by developing countries to the developed world would be achieved through a number of different changes to existing debt relief mechanisms:

Changes to the IMF/World Bank’s Heavily Indebted Poor Countries (HIPC) initiative. The UK has secured a fundamental review of the HIPC initiative, which is due to take place this year. Alterations to HIPC proposed by the UK include:

Reassessing the current debt sustainability ratios in order to provide deeper and wider debt relief.

Shortening the timetable for debt relief. Countries currently only receive the benefits of debt relief after 6 years. We are pressing for this timescale to be halved in order to provide quicker debt relief for the most highly indebted countries.

IMF gold sales

Raising the ceiling on debt relief. The UK is pressing for all creditor countries (members of the Paris Club of official creditors) and International Financial Institutions to agree to go above the traditional 80% ceiling on debt relief where necessary.

The UK will be pressing for the resources released from debt repayments as a result of this initiative to be invested in health, education and poverty reduction programmes in the countries concerned. In this way, the governments of the developing countries themselves will be brought in to our Millennium challenge.

INCREASE THE AID

A UK Call For The Developed World To Increase Its Aid Flows To Poor Countries To $60 Billion By The Year 2000

Last year it was announced that the UK aid budget was to be increased by 28% in real terms, raising the budget to over 3 billion Pounds a year for the first time – implementing the British Government’s pledge to reverse the decline in development assistance.

However, the international trend is very different. Aid from Western governments to developing countries has been declining in recent years. Indeed, in 1997 there was a 14% decrease in aid flows from western governments to the third world.

That is why the Government will be pressing, as part of a Millennium Challenge, for the western community to step up its aid contributions to the developing countries. Our target will be for official development finance from western governments to governments of third world countries to be increased to $60 billion by the year 2000.

This increased finance to the poorest countries will also be reinforced by reductions in annual debt repayments as a result of our $50 billion debt stock reduction.

This aid target will enable us to tackle poverty effectively and to make a lasting difference to the lives of poor people. A key point to communicate in any campaign in this area is that debt relief, and the UK’s role in pushing for it, is only a part of the overall solution. Debt relief must be seen as one of a number of mechanisms that are being used to support those countries which are themselves committed to eliminating poverty and to increasing social expenditure, particularly on health and education.

GIVE A BILLION

A Challenge To UK NGOs To Increase Their Donations To Developing Countries To $1 Billion For The Millennium

The Chancellor and the Secretary of State for International Development have challenged UK NGOs to increase their aid flows to the world’s poorest countries by a similar proportion to the Government’s efforts on debt relief, raising the total to $1 billion over two years.

The Government is encouraging and facilitating the NGO target by introducing Millennium Gift Aid. This scheme provides for tax relief to be claimed by UK charities on donations of over 100 Pounds to support education, health and anti-poverty projects in the world’s poorest countries. This means that money donated goes further. Every 100 Pounds donated becomes 123 Pounds, or 140 Pounds. The relief is time-limited to the end of the year 2000. This is to take the opportunity presented by the Millennium to ask people in this country to give to those in poor countries who are less fortunate than ourselves.

Over 260 UK charities have already registered for Millennium Gift Aid.

Official statistics show that aid agencies are currently donating a total of $330 million in private aid flows every year. To raise that amount to $1 billion for the Millennium, NGOs together would have to boost their efforts by 100 million Pounds a year for two years.

This money should be put directly to work in the poorest developing countries.

SELL THE GOLD

A Campaign To Lobby The IMF To Sell Some Of Its Gold Reserves, Invest The Proceeds And Spend The Interest On Increased Debt Relief

The IMF holds several billions of gold. The UK has consistently argued that a proportion of this gold should be sold in order to pay for an enhanced Heavily Indebted Poor Countries (HIPC) initiative. To date, there has been no international agreement.

The UK would support the sale of at least $1 billion of IMF gold in order to fund an enhanced HIPC initiative, and more if necessary. The IMF gold would be sold and the money reinvested in an interest bearing asset. The interest would then be used to fund debt relief.