The 18 -- which are among the world’s poorest countries -- will be freed of a debt burden that totals some $40 billion. All but four of the nations are in Africa. The others are in Latin America.
World Bank President Paul Wolfowitz announced the deal on Sunday this way. "From concert stadiums to high-profile summits, people from rich and poor countries alike have been moved by the suffering we see in so many parts of our world. They have demanded action, and with this debt relief agreement, they have it," Wolfowitz said.
Wolfowitz said that all that remains to begin implementing the deal is for bank officials to give the World Bank’s board of directors a paper outlining a compensation schedule and monitoring scheme. He said that process can be completed “within weeks.”
The 18 countries have met specific economic and structural conditions mandated by the World Bank and the IMF in exchange for the debt relief.
Under the plan, a further 20 of the world’s poorest countries could also become eligible for debt relief in the future.
The debt relief actions comes after leaders of the G-8 agreed at a meeting in July in Scotland to cancel all debt owed to the two international lending institutions by the world’s poorest states.
But as the relief plan was finalized last week, some member states of the World Bank and IMF worried that the deal might undermine the existing resources of the two institutions. They said that could compromise the World Bank’s ability to continue lending to poor countries.
To meet those concerns, the G-8 on 23 September issued a written pledge to provide any extra money needed to offset strains. The G-8 groups Britain, Canada, France, Germany, Italy, Japan, Russia, and the United States.
Trevor Manuel, chairman of the World Bank’s panel that approved the debt cancellation, said that the measures come at a good time for African states because they could help boost some positive recent economic growth trends on the continent.
"Right now the macroeconomic conditions in Africa have never been better. You have growth across the continent at 4.7 percent. You have inflation in single digits. The bulk of countries have very strong fiscal balances as well,” Manuel said.
Development experts say lifting the debt burden of the 18 poor nations could boost their annual economic growth by half a percentage point.
Max Lawson, a policy adviser at the nongovernmental aid organization Oxfam International, said “the deal that has been sealed...this weekend will provide urgently needed money for education and health care.”
Oxfam International estimates that poor countries spend $100 million a day on debt repayments, diverting precious resources away from critical social and development needs.
The 18 nations which will be freed of their debts to the World Bank and IMF are: Benin, Bolivia, Burkina Faso, Ethiopia, Ghana, Guyana, Honduras, Madagascar, Mali, Mauritania, Mozambique, Nicaragua, Niger, Rwanda, Senegal, Tanzania, Uganda, and Zambia.