Bankers 'misleading the world' - says Catholic aid agency

 CAFOD is accusing G8 leaders of misleading the world on its claims to have cancelled 100 per cent of the debts of the poorest countries. The agency said today that the G8 leaders are majority shareholders of the World Bank and IMF, and are refusing to implement policies that will make a real difference to the indebtedness of the world's poorest countries. G8 leaders have portrayed their debt cancellation so far as the solution to the problem. But they preside over the World Bank and IMF collecting millions of dollars from the world's poorest countries. A spokesman said: "it is an obscenity that those with the least are still paying money to those who already have the most." CAFOD debt expert Henry Northover said: "Promises have been broken. Only a fraction of the $100 billion promised at the G8 Summit in Cologne two years ago has been delivered. Most poor countries are paying more in debt servicing than on vitally needed health care or education programmes. In the context of stemming the spread HIV/AIDS pandemic, policies that limit expenditure increases in these areas are grossly irresponsible and unjust. "Six years after the Heavily Indebted Poor Countries (HIPC) Initiative was agreed, and two decades after the debt crisis first started, the world's most powerful leaders are still failing to solve the problem. Northover said: "G8 leaders will not deserve the plaudits they have received on debt until they deliver the resources needed for poverty reduction. This means 100 per cent cancellation of unpayable debt for the poorest countries. "G8 leaders have long accepted that the rationale for debt relief is poverty reduction. Yet they continue to work with a system that was designed merely to return countries to creditworthiness so they could continue to repay. The HIPC initiative is fatally flawed by calculating debt sustainability according to a country's foreign exchange earnings from exports, rather than on the finance required to meet internationally agreed development targets."

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