Debt Relief -- G-8 Bails Out Poor Nations [again]

The G-8 finance ministers agreed today on a debt-relief package for the world's poorest countries.

AP reports:

LONDON - Finance ministers from the Group of Eight industrialized nations agreed Saturday to a historic deal canceling at least $40 billion worth of debt owed by the world's poorest nations.

Britain Treasury chief Gordon Brown said 18 countries, many in sub-Saharan Africa, will benefit immediately from the deal to scrap 100 percent of the debt they owe to the World Bank, the International Monetary Fund and the African Development Bank.

As many as 20 other countries could be eligible if they meet strict targets for good governance and tackling corruption, leading to a total debt relief package of more than $55 billion.

It might be argued that this simply rewards bad behavior on the part of the recipients, but continuing the payments would have placed a huge burden on poor countries. In the past lending agencies such as the World Bank have been notoriously willing to trust recipients to honor their pledges and have repeatedly been burned by corrupt kelptocrats. Under Wolfowitz that is likely to change, at least at the Bank, although Tony Blair's proposals are not encouraging in this regard.

Read about it here.