G-8 agrees to write off $40B of poorest nations’ debt

? The world’s richest countries agreed Saturday on a historic deal to write off more than $40 billion of debt owed by the poorest nations.

The debt relief package backed by finance ministers from the Group of Eight industrialized nations is part of a British-led effort to lift Africa out of poverty.

U.S. Treasury Secretary John Snow, who helped hammer out the deal, called it “an achievement of historic proportions.”

Officials said 18 countries, many in sub-Saharan Africa, will benefit immediately from the pact to scrap 100 percent of the $40 billion they owe to the World Bank, the International Monetary Fund and the African Development Bank. As many as 20 other countries could be eligible if they meet strict targets for good governance and tackling corruption, which could eventually boost the total package to more than $55 billion.

However, Britain, which holds the G8 presidency this year, faces further tough negotiations on another ambitious target of boosting international development aid by $50 billion a year. Britain hopes a second accord will be reached on this aid goal at G8 summit on July 6-8 in Gleneagles, Scotland.

Aid charities welcomed the package, but said at least 62 countries needed full debt cancellation.

The debt relief proposal was put forward by Britain and the United States following talks in Washington last week between President Bush and British Prime Minister Tony Blair. It was made possible by a significant concession by the White House when it agreed the debt write off would not jeopardize future aid funding.

The deal will initially scrap $40 billion owed by 18 nations eligible for debt relief under the Heavily Indebted Poor Countries Initiative, including Benin, Bolivia, Burkina Faso, Ethiopia, Ghana, Guyana and Mali.