Brown launches plan to ease Third World debt

Gordon Brown will agree the first stage today of a radical programme to offer debt relief worth $2bn (£1.1bn) to the world's poorest nations.

Gordon Brown will agree the first stage today of a radical programme to offer debt relief worth $2bn (£1.1bn) to the world's poorest nations.

He will sign a deal for Britain to pay $75m over 10 years to cover Tanzania's debts to the World Bank in return for action to improve education, health and living conditions. Mr Brown is expected to agree a similar unilateral deal with Mozambique and is in negotiations with other heavily indebted countries as part of a drive to persuade the world's richest nations to write off the $80bn owed to the World Bank, the African Development Bank and the International Monetary Fund (IMF).

Under the plan, Britain is offering take over 10 per cent of the debt repayments and interest owed by 70 Third World countries if they pledge to spend the money they save on education, health and poverty reduction programmes.

Creditor nations have already written off $70bn in unpayable "bilateral" debts owed directly to industrialised nations by Third World states. But "multilateral debts" owed to international institutions still make up 80 per cent of the money owed by poor countries.

Mr Brown said he would urge finance ministers from the G8 industrialised nations to follow Britain's lead, and each take on a proportion of international debts owed to the World Bank.

As he toured Tanzania as part of a four-nation, four-day fact-finding trip to Africa, he also insisted that he was confident of persuading G8 members to allow the IMF to write off its Third World debt by revaluing or selling gold reserves.

Mr Brown's action on debt would be one of the first fruits of the British G8 presidency, which the Government has pledged to use to fight poverty across Africa.

He said in a speech: "I believe there is an international consensus that we have to do something about debt. My central proposal is that this year the richest countries should match bilateral debt relief, relief from the $80bn of debt owed to the IMF, the World Bank and the African Development Bank.

"Just as the UK led the way on 100 per cent bilateral debt relief, so too today we will again lead by example."

Twenty-seven heavily indebted countries have already been given relief from bilateral debts since 1997, but Mr Brown said Britain was offering to take over a proportion of multilateral debts owed by many more countries at a cost of up to $2bn over 10 years.

States which sign up to debt relief will have to guarantee that money is spent on development. Those who are at war or fail to spend their extra income on development will not have their debts payments met.

Mr Brown told an audience of civic leaders in Dar es Salaam, Tanzania's commercial capital, that debt relief had already allowed the country to abolish primary school fees. Fees had also been scrapped in Kenya, Malawi and Uganda.

"Overall, across sub-Saharan Africa, the primary school enrolment rate has increased from 74 per cent in 1990 to 87 per cent in 2001," he said. "Thirty million more children have enrolled in primary school since 1990 and secondary enrolment in the least developed countries has increased from 18 per cent in 1990 to 30 per cent in 2000."

But he warned that 100 million children across Africa and elsewhere were still denied the chance to attend school. He said: "Financing education today will result in a population that is better-qualified, more productive, healthier, richer and increasingly able to carry the burden of financing education for the next generation."

The Tanzanian government welcomed Mr Brown's decision, which, a spokesman said, would allow it to increase secondary school provision from 10 per cent of the country's children to 45 per cent by 2015.