HC Deb 23 February 1978 vol 944 cc1675-7
3. Mr. Hooley

asked the Chancellor of the Exchequer if he will endeavour to organise a special meeting of Commonwealth Finance Ministers to discuss the problem of external indebtedness of non-oil-exporting developing countries within the Commonwealth.

The Financial Secretary to the Treasury (Mr. Robert Sheldon)

The Government regularly have discussions with Commonwealth and other developing countries in which the question of their balance of payments and debt is covered. UNCTAD is the forum in which the debt issue is fully considered. We hope there will be a constructive review of this problem at the Ministerial Trade and Development Board in the week after next.

Mr. Hooley

Is my right hon. Friend aware that some countries—Sweden, Canada, and one or two others—have already cancelled the debts of the poorest of their debtors in the developing countries? Since, apparently, it is Government policy to deal with these matters case by case, will he consider cancelling the debts of countries whose per capita income is less than $200?

Mr. Sheldon

My right hon. Friend is right to say that these matters are dealt with on a case-by-case basis. That is the purpose of the Ministerial Trade and Development Board. Not all these countries have the same problems. They all have their individual problems, and I believe that the forum of UNCTAD, in which these matters are to be discussed the week after next, is the best place for that process to take place.

Mr. Maurice Macmillan

Does the Minister accept that this is an aspect of a wider problem, involving oil money that is not available for long-term investment? It causes Governments world wide to create debts. Should not that money be mopped up so that it will not add to inflationary pressures? Do Her Majesty's Government have any plans, with their partners in Europe or with other countries, to take positive action to mitigate the evils of the effects of excess savings over investment?

Mr. Sheldon

The right hon. Gentleman is right, because the indebtedness of these less developed countries has grown compared with the situation in the 1960s. Last year serious problems were foreseen and there were fears that a default position would lead to further failings. Fortunately, those fears have not been realised. There is a great amount of international co-operation in this matter, and the meeting that is about to take place will deal with these problems. I believe that that is the right forum for such discussions.