By Agencies

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Group of Seven countries (G7) have pledged to cancel their bilateral debts with earthquake-ravaged Haiti, and urged international lenders to do the same, Jim Flaherty, the Canadian finance minister, has said.

Ministers also said on Saturday that any future funding for Haiti's recovery would come in the form of grants, not loans.

"The debt to multilateral institutions should be forgiven and we'll work with these institutions and other partners to make this happen as soon as possible," Flaherty said at a press conference closing a two-day gathering of finance ministers from the G7 industrialised nations on Saturday.

Over the course of the two-day meeting in the Canadian Arctic town of Iqaluit, which was attended by Robert Zoellick, the World Bank president, and Dominique Strauss-Kahn, the managing director of the International Monetary Fund (IMF), members discussed what long-term assistance Haiti will need, Flaherty said.

He did not mention any figures, but Haiti currently owes international creditors about $890 million, the Dow Jones financial news agency said.

Aid struggle

Haiti says that more than 200,000 people died in the January 12 earthquake, which displaced hundreds of thousands more.

Aid has come from around the world but so much of Haiti's infrastructure was lost or damaged that officials say it will take a wholesale reconstruction effort to get the country on its feet economically.

Gordon Brown, the British prime minister, hailed the G7 decision, saying "a nation buried in rubble must not also be buried in debt".

"The UK has already cancelled all debts owed to it by Haiti and I strongly welcome today's G7 commitment to forgive Haiti's remaining multilateral debt.

Timothy Geithner, the US treasury secretary, endorsed the position on Saturday: "The earthquake in Haiti was a catastrophic setback to the Haitian people who are now facing tremendous emergency humanitarian and reconstruction needs, and meeting Haiti's financing needs will require a massive multilateral effort.

"Today, we are voicing our support for what Haiti needs and deserves - comprehensive multilateral debt relief."

There have been persistent problems in getting aid to the more than one million Haitians left homeless after the 7.0-magnitude quake which levelled much of central Port-au-Prince and surrounding towns.

Rescue operators struggled to get aid out to earthquake victims and many aid groups called for greater co-ordination.

During his visit to Port-au-Prince on Friday, Bill Clinton, the former US president,  apologised for delays in getting aid to the survivors.

"I'm sorry it's taken this long ... I'm trying to get to what the bottlenecks are, part of it is just shipping the volume of food in here that is necessary."