THE $40 billion (£22 billion) deal brokered by Tony Blair to cancel debt owed by Africa’s poorest nations is at risk of unravelling, campaign groups said yesterday.

Finance ministers from the world’s richest nations, meeting in Washington this weekend, will seek to finalise the funding needed for the debt cancellation to go ahead.

The plan has prompted concern that the nations may not provide all the cash needed to prevent the write-off of African debts owed to the World Bank eating into the Bank’s resources.

The Group of Seven (G7) leading economies and other Western governments are expected to top up funding for the World Bank’s International Development Association (IDA), the biggest international aid institution, to make up the losses from the debt cancellation.

But there are worries at the Bank and among campaigners that the shortfall may not be offset fully.

Some rich countries outside the G7 are also unhappy over the debt-cancellation deal agreed at the Gleneagles meeting this summer, protesting that they are being told how they should spend their money on aid. Belgium and the Netherlands argue that insufficient extra funding is being committed for the IDA.

Paul Wolfowitz, President of the World Bank, cast doubt yesterday on prospects that a final agreement can be clinched at the International Monetary Fund and Bank annual meetings this week.

“We are committed to getting it done, and we expect real progress at these meetings,” he said. He added: “It’s a challenge to get that many countries together for a consensus. We have to get a consensus that we have the commitments necessary that this debt cancellation deal does not come at the expense of IDA, and does not come at the expense of developing countries.”

Mr Wolfowitz, the former US Deputy Defence Secretary, said that he was encouraged that the Bush Administration had backed congressional legislation that would pledge US support to make up the lost funds.

The IDA is the World Bank’s main lending arm. If it loses resources from the debt cancellation deal, campaigners and poorer nations fear it will be less well equipped to provide assistance for development in Africa and elsewhere.

Although Mr Blair and his fellow leaders from the G8 (the G7 nations plus Russia) trumpeted the $40 billion debt write-off after the Gleneagles talks, the details were left to be worked out over the rest of this year, including who should pay and how.

Britain’s Chancellor will play a central part in this process today and over the weekend in talks with fellow G7 finance ministers and IMF and World Bank officials, and when he chairs a meeting of the IMF’s ruling international monetary and financial committee tomorrow.

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