The group of seven industrialized countries (G7) has agreed to freeze for one year payments of debt owed by the tsunami affected countries to help their reconstruction efforts, according to British Chancellor of the Exchequer Gordon Brown Friday.

Brown said that the deal, unveiled ahead of a meeting of the Paris Club of creditor countries on Jan. 12, would only freeze repayments, rather than cancel the debt itself.

The G7 would also likely to urge the Asian Development Bank to speed up its assistance to the stricken countries.

Asian countries affected by the devastating Dec. 26 waves have a total of roughly 272 billion US dollars in external debt, with Indonesia alone owing some 48 billion US dollars to the Paris Club.

Countries hardest hit by the tsunami are Indonesia, India, Sri Lanka, Thailand and the Maldives where a death toll from the tsunami of well over 150,000 has been reported. These countries also face an enormous task of reconstruction and relief aid for the survivors.

The moratorium is expected to last at least a year, and could be a vehicle to tackle debt in the longer term.

This year Britain is president of the G7, which also includes the United States, Japan, Germany, France, Italy and Canada. If Russia is included it is known as the G8.

The G7 finance ministers also urged the World Bank and IMF to complete their needs assessment by month-end.

They also said they agreed to urgently support consideration ofsetting up a tsunami early warning system for the Indian Ocean that could help prevent another similar tragedy from happening.

Britain said earlier it wanted restructuring as well as an immediate freeze, suggesting that Sri Lanka's debt should be canceled altogether.

"In the wake of this tragedy, the true test of the international community will be how we can fund and assist both the immediate day-to-day emergency services needs but also the long-term reconstruction of the countries affected by the tsunami," said Brown.

But some analysts worried that debt relief for tsunami-hit Asian economies may offer them short-term gain but bring pain in the long run as the cost of servicing debt payments may rise in the future.

Source: Xinhua