As the July 6-8 G8 gathering of the world's top industrialized nations in Scotland approaches, finance ministers from the participating nations decided on Saturday in London to a cancel at least $40 billion of debt owed by 18 of the poorest nations in the world.
The 18 mostly sub-saharan African nations will benefit from the agreement.
The G8, comprising Britain, Canada, France, Germany, Italy, Japan, Russia and the United States, agreed to immediately write off $40 billion of debt owed to by following 18 nations: Benin, Bolivia, Burkina Faso, Ethiopia, Ghana, Guyana, Honduras, Madagascar, Mali, Mauritania, Mozambique, Nicaragua, Niger, Rwanda, Senegal, Tanzania, Uganda and Zambia.
These countries will immediately be forgiven 100 percent of their debt to the World Bank, the International Monetary fund, and the African Development bank.
"I can confirm that the G8 finance ministers have agreed to a 100 percent debt cancellation for the Heavily Indebted Poor Countries (HIPC)," said Gordon Brown, Britain's main finance minister at a news conference according to Reuters.
About 20 other nations could be eligible if they establish a good record of monetary reform and develop a clear strategy to reduce poverty. The total debt relief package could reach about $55 billion.
Brown said that the nations are "presenting the most comprehensive statement that finance ministers have ever made on the issues of debt, development, health and poverty," according to Agence France Presse.
The Christian Medical Fellowship, based in the UK welcomed the debt relief by G8 governments.
"We commend the decision by G8 finance ministers to do something positive about the problem and would encourage them to extend the measure to other countries," read a statement by the CMF.
Christian Aid, also based in the UK, viewed the announcement as a step in the right direction, but said much more should be done.
According to Christian Aid, 30 other nations still needed debt relief but were not exempt because they could not meet the stringent standards and reforms required by the finance ministers.
"These reforms can actually hurt the poor and erode the benefits of debt cancellation, as the UK government and the Commission for Africa have both acknowledged. Countries may, in fact, have to jump through even more economic hoops in the new debt deal," said Anna Thomas, a Christian Aid debt and HIV expert.
Christian aid called for nations to be able to determine "how or when" to liberalize their trade policies in order to improve their economies.