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The G20 Montreal Ministerial Meeting:
A Report on Poverty and Debt Relief Initiative

Oana Dolea and Bob Papanikolaou
G8 Research Group
Montreal, October 25, 2000

Seven hundred million people reside in the 42 Highly Indebted Poor Countries (HIPCs), a number that is projected to rise to 1.5 billion by 2030. Action is needed. However, the promise to increase the amount of debt relief offered to 100 percent made by the rich countries of the G7 at their summit in Cologne in 1999 has yet to be fully enacted. This commitment is only close to fulfillment in 12.5% of the HIPCs. This is unacceptable, considering that the Cologne debt initiative promised to include 75% of HIPCs in the debt-relief process by the end of 2000.

The current international system does not meet the scientific and technological needs of these countries, the minimal healthcare requirements taken for granted in the developed world, and the basic educational needs to sustain a viable social capital. As a result, the amount of poverty is rapidly increasing, widening the gap between the rich and the poor. Poverty and debt are inter-related, in that a heavy debt burden prevents states from developing stable social infrastructures conducive to economic growth and poverty relief.

Prior to the G20 meeting in Montreal on October 24 and 25, 2000, most notably at the 2000 Okinawa Summit, the G7 made several commitments related to the HIPCs and debt relief: mobilize the instruments and resources of the international community so as to establish effective developmental policy; improve access to their markets significantly; strengthen their official developmental assistance (ODA); implement an ambitious plan to combat infectious diseases; make available additional resources for basic education; and address the widening digital divide. The G7 also agreed to give special attention to three issues: debt, health, and education, to spur the reduction of poverty. The G20, by providing an international forum for a broader range of countries that the G7/8 can offer, could further the progress of impoverished countries.

At the first meeting of the G20, in Berlin in 1999, the finance ministers and central bank governors addressed the issue of prudent debt management. A country's external debt plays an important role in determining its vulnerability to international financial crises. The G20 established that avoiding an excessive buildup of short-term debt relative to foreign exchange reserves is crucial to preventing a financial crisis. Members agreed to consider how countries can use prudent external debt management to reduce the risk of such crises and the resulting impoverishment.

At the second G20 meeting, in Montreal on October 24 and 25, 2000, Chair Paul Martin stated that the group would address "globalization in all of its aspects, not simply its economic but its social aspects, the absolute necessity of reducing poverty, of eliminating the gap between the rich and the poor." He emphasized that this would be "the first time that an organization of the reputation of the G20 has undertaken to do this in as in-depth a way as [he] would certainly hope [they would] with this meeting."

The G20 communiqué declared that the member countries would "create more favourable conditions for the integration of heavily indebted poor countries into the global economy by urging both bilateral and multilateral creditors to participate fully in the enhanced HIPC Initiative, and, where appropriate, call for those bilateral creditors that have not already done so to consider taking the additional step of committing to 100-per-cent reduction of ODA claims and eligible commercial claims. [G20 members] further encourage all bilateral donors to improve the effectiveness of international assistance and direct aid to those poor countries that are serious about tackling economic reforms and poverty reduction." They also agreed to "[c]ontribute to international efforts to increase the provision of other public goods to address serious issues such as infectious disease, agricultural research and the environment, which cut across national borders and require concerted global co-operation." These latter efforts are crucial to tackling the poverty issue. The communiqué contained an annex that addressed reducing the vulnerability of emerging markets to financial crises by focusing on exchange rate arrangements, prudent liability management, private sector involvement, and the establishment of international standards and codes.

The communiqué restated the consensus of the G20 in Berlin and the G7 at Okinawa, and no further progress was made on the enforcement of the 100 percent debt relief initiative put forward at the 1999 G7 Cologne summit. Although in his opening statement and again in closing, Martin emphasized that globalization is not solely about financial and economic concerns, and that social matters play an equal role, this latter was not reflected in the actual resolutions of the G20 meeting. However, the continued presence of aid, both social and economical, for the world's poor on the agenda was encouraging.

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