# = pounds sterling
HM Treasury News Release
42/99 3 March 1999
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* CUT THE DEBT * BOOST THE AID
* GIVE A BILLION * SELL THE GOLD
Gordon Brown and Clare Short unveil four point plan
to help the world's poorest countries
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.
1. If you have access to the Internet, you can find this
news release and other Treasury information at
http://www.hm-treasury.gov.uk
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.