Is Africa debt write-off really a 'historic breakthrough'?

The G8 summit is only a first step - at www.MoneyWeek.com - the best of the international financial media.

Aid and debt campaign groups joined Chancellor Gordon Brown this week in hailing a "historic breakthrough" on debt relief by G8 finance ministers in London, said Gary Giles in the FT. The agreement covers $40bn owed by 18 poor but well-governed countries to the World Bank, the IMF and the African Development Bank with nine more countries likely to meet the criteria within the next 18 months.

But is this write-off of the poorest countries' multilateral debts really the major breakthrough that Gordon Brown claims? asked The Times. Campaigners argue that the West was morally obliged to cancel the debt since they should never have lent the money in the first place knowing full well it would be swallowed up by the continent's kleptocrat rulers. Yet this kind of "moral hazard" argument in favour of debt cancellation dismays many Africans, who fear long-run damage if "their villains are seen to get off the hook" once again.

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