Latin America (Debt Repayment) (Hansard, 9 April 1986)

§ 7. Mr. Eastham
asked the Secretary of State for Foreign and Commonwealth Affairs what recent discussions he has held with Latin American Governments concerning their repayment of debts; and if he will make a statement.

§ Mrs. Chalker
The heavy debt burden borne by many Latin American Governments continues to cause us concern; this problem is frequently discussed in the course of our contacts with their Governments.

§ Mr. Eastham
In view of the serious outflow of funding for poor Latin American countries and as that is being compounded by the loss of revenues from oil, would it not be a good thing if the Government took some intitiative, perhaps with their EEC partners, to organise a conference at which sane policies could be introduced regarding pledges on capping interest rates to allow those countries to get over this most difficult period?

§ Mrs. Chalker
There is no doubt that the question of reducing the pressures on Latin American countries is taken up not only by the IMF, but by the World Bank. I believe that the Baker initiative, which is being applied to middle income debtors and, indeed, to those who have greater problems—the poorer debtors of whom the hon. Gentleman spoke—will allow those donors to look at the needs of those countries.
The effect of the oil price on those debtor countries varies, because it depends on whether they are importers or exporters. The matter needs to be looked at on a case-by-case basis. That is why we support the Baker initiative. We welcome the Baker proposal that emphasis should be put on growth in those countries to overcome their problems.

§ Mr. Tom Clarke
Does the hon. Lady accept that the Baker initiative in itself is hardly sufficient to deal with the enormous world debt crisis, to which the American economy has made a contribution? Does she accept that the Third world is becoming fed up with financing the American deficit, and it is time we made representations in that direction?

§ Mrs. Chalker
There is no easy answer to anybody's debt problem. To get out of debt is a much harder job than it ever was to get into it. The duty of the developed countries is to promote non-inflationary growth in the world economy so that, by means of open markets, debtor countries can expand and begin to pull back the horrific debt problem. There is no easy answer for developed nations, and certainly none for the underdeveloped nations.