HL Deb 16 September 2004 vol 664 cc126-7WS
Baroness Amos

My honourable friend the Parliamentary Under-Secretary of State for International Development (Mr Gareth Thomas) has made the following Statement:

On 15 September 2004, The Secretary of State for International Development wrote to Shaukat Aziz, Pakistan Prime Minister and Minister of Finance, to notify him that DfID has now cancelled Pakistan's ex-CDC debt amounting to £19 million.

The outstanding loans made by the former Commonwealth Development Corporation to public sector bodies in developing countries were removed from the newly formed CDC Capital Partners balance sheet on 31 August 2000 and transferred to DfID. In the case of Pakistan, the loan concerned was to the Karachi Water and Sewerage Board.

The only other inter-governmental debt between the UK and Pakistan relates to export credit guarantees. Following the Paris Club agreement, this debt was rescheduled and is now valued at only £9 million.

In 2001 DfID agreed to cancel the ex-CDC debt, subject to Pakistan completing the second review of the poverty reduction growth facility (PRGF) with the International Monetary Fund. In the interim, the debt was suspended with no interest payments required from Pakistan to DfID. On 23 June 2004 the IMF executive board successfully completed the second annual review of Pakistan's PRGF, implying the ex-CDC debt can now be cancelled.

The Pakistan programme continues to be a high priority for DfID. As announced to the House in March 2003, during 2003 DfID provided Pakistan with £55 million to cancel debt held with the Asian Development Bank, World Bank and International Monetary Fund. Over the next two years (2004–05 and 2005–06), DfID's assistance to Pakistan will be £70 million and £74 million respectively. This will support the Government of Pakistan in achieving the millennium development goals through the implementation of their poverty reduction strategy (published in December 2003). Priorities for DfID are increasing the incomes of poor people, improving service delivery to poor people and increasing accountability of the state to poor people.