The much-vaunted G8 debt relief proposal for poor countries is sure to be passed this weekend, despite mounting concerns over its implications, a senior African government official told Emerging Markets yesterday.
Emmanuel Tumusiime-Mutebile, Central Bank Governor of Uganda, said that he was 'certain' the G8 debt relief proposals would be confirmed.
His comments came as G7 ministers last night threw their support behind the debt relief proposal while urging the international community 'to expeditiously complete and implement this historic and crucial initiative.'
The governor's confidence contrasts with UK chancellor Gordon Brown's warning last night that hopes of finalizing the deal were still 'on a knife edge.'
World Bank President Paul Wolfowitz on Thursday backed Dutch and Belgian complaints over the deal's financing, and its implications for the integrity of the International Development Agency (IDA). 'I share those concerns strongly, and I am glad they are raising them,' he said.
Uganda is one of 18 countries that were promised 100% cancellation of their debts to the World Bank and IMF in July. But the Gleneagles proposals, nominally worth $40 billion, require confirmation by the lending institutions' other shareholders.
'We had a meeting in Paris with the IDA deputies last week and the Highly Indebted Poor Countries will definitely get the relief,' Tumusiime-Mutebile said.
The G8 has already promised to replace the IDA payments dollar for dollar, but some countries are now requesting a legally binding commitment, as well as attaching additional conditions.
Middle income countries are also raising objections to a deal offered over their heads. 'We think developing countries should not be called upon to share the burden,' said Otaviano Canuto, Brazil's Executive Director at the World Bank yesterday.
Todd Moss, research fellow at the Centre for Global Development, says IDA shareholders are using the dispute as leverage in a longer term dispute. 'The IDA has always relied on the richest countries making replenishment payments every three years. The concern is not over losing the reflows from Niger and Mali, but whether the debt relief signals a decline in its wider role.'
The internal politics could lead to modifications, though, says Soren Ambrose, a policy analyst at the 50 Years is Enough campaign. 'The relief might not add up to the promised 100%, additional conditions could be added or it might be delayed until next summer. But there's huge political pressure on them to pass this.'