Commonwealth finance ministers seek rapid debt relief and lowering of trade barriers

Commonwealth finance ministers have called for the swift implementation of debt write-off under an initiative for heavily-indebted poor countries (HIPC) and the lowering of barriers to allow all countries to benefit from new trade opportunities.

In a communiqué issued in Sri Lanka on 14 September 2006, delegates at the Commonwealth Finance Ministers Meeting welcomed agreements to implement proposals for debt cancellation set out in the Multilateral Debt Reduction Initiative launched at the Gleneagles G8 Summit last year. They said the move would enable countries to escape from the burden of unsustainable debt.

The ministers pressed donors to deliver on their undertakings to ensure payments made to finance this debt reduction were additional to other aid flows. Creditor co-ordination should also be strengthened to ensure that countries do not incur excessive debts. 

Ministers called for the increase of commitments to the Aid for Trade initiative to be independent of the progress on the Doha Round. 

“This should include support for least developed countries, small and vulnerable states and other developing countries hit by large trade shocks,” ministers said in the communiqué.

It was noted that rising inflation and interest rates may slow down global growth and the flow of private finance to developing countries. To combat this, the Finance Ministers called for a tighter fiscal policy in the United States, continued structural reform in Europe, increased domestic demand in Asia and oil-exporting countries, and increased exchange rate flexibility in Asia.

At a Commonwealth HIPC Ministerial Forum held on 12 September, ministers remained concerned about the non-participation or lack of full participation in the HIPC initiative by the vast majority of the non-Paris Club creditors and repeated the need for collective diplomatic initiatives from HIPCs and donors. 

The Paris Club is a group of creditor countries which assist in finding co-ordinated and sustainable solutions to the payment difficulties experienced by debtor nations. 

The ministers also sought the need for prudent borrowing policies and debt management strategies by all low income countries.

The full text of the Commonwealth Finance Ministers Meeting 2006 communiqué is available here

Secretariat Links:

• Communiqué: Commonwealth Finance Ministers Meeting, Sri Lanka, 12-14 September 2006
• Swift Delivery of Aid and Debt Relief Called for by Secretary-General
• Economics and Trade