The President of the African Development Bank, Mr. Omar Kabbaj, welcomed the agreement reached by G-8 Ministers of Finance to extend 100 percent debt stock relief on debt owed to the African Development Bank, the IMF, and the World Bank by heavily indebted poor countries that had reached their completion points under the HIPC initiative. He also urged othor donor countries to support the initiative.
Mr. Kabbaj expressed his congratulations to Prime Minister Blair and Chancellor Gordon Brown for the leadership role that the United Kingdom played in achieving this important breakthrough.
Mr. Kabbaj also welcomed the G8 pledge to safeguard the financial integrity of the international financial institutions as reflected in the decision of the G8 to compensate the African Development Bank and the World Bank for forgone principal and interest repayments of the debts cancelled. "The continued ability of these institutions to provide development finance over the long term is of vital importance to the development prospects of Africa," he said. The President also welcomed the G8 pledge that the debt relief financing will be additional to regular replenishments of IDA and ADF.
Mr. Kabbaj noted that the new debt relief agreement of the G8 Ministers would free considerable resources for the beneficiary countries, enabling them to increase their investments in key sectors, such as education and health, as well as finance other poverty reduction efforts. This, in turn, can be expected to boost their progress towards attaining the Millennium Development Goals (MDGs).
In this regard, Mr. Kabbaj noted that the countries that had reached their completion point had made significant progress in achieving macroeconomic stability and have taken action to improve their investment climate by reforming their financial sectors and pursuing governance reforms. Mr. Kabbaj expressed his confidence that these countries would stay the course on their reform programs, as these are essential for accelerating economic growth and reducing poverty.
Looking forward, Mr. Kabbaj expressed his hope that the forthcoming Summit at Gleneagles in July 2005 will result in additional actions being taken by the G8 that are critical for supporting Africa's development efforts. These include measures to raise ODA levels significantly in line with the pledges made at Monterrey in 2002 and recent other fora. In addition, he expressed his hope that agreement would be reached on other proposals to raise and frontload ODA such as the International Finance Facility (IFF) proposed by the UK, and various international tax proposals supported by France and Germany. In addition, he noted that Japan has proposed an enhanced private sector assistance program with the African Development Bank.
Mr. Kabbaj pointed out that the African Development Bank, the IMF, and the World Bank would soon hold meetings to discuss and map out implementation modalities for the G8 debt relief initiative, as it is important to ensure close collaboration and coordination among the three institutions for the successful implementation of the initiative.