HC Deb 29 June 1987 vol 118 cc250-2
56. Mr. Alton

asked the Secretary of State for Foreign and Commonwealth Affairs what is his Department's policy towards the imposition of debt repayment ceilings by developing countries.

Mr. Chris Patten

The unilateral imposition by debtors of repayment ceilings risks damage to their long-term creditworthiness and can hinder their development. I would prefer to see the genuine problems of the poorest and most indebted countries settled by joint action on the part of creditors.

Proposals made by the Government for easing the debt burden of certain sub-Saharan African countries received broad support at the Venice summit.

Mr. Alton

Notwithstanding the Minister's reply, is he aware that in Peru, which had the fastest economic growth in Latin America in 1986, there was an 8 per cent. growth rate because it linked its repayment of loans to 10 per cent. of all export earnings? Is that not an approach that the Minister would welcome and commend to other impoverished countries? Does he not accept that many Third world countries are in great poverty because they are now paying back more in loan repayments than they are receiving in aid?

Mr. Patten

The first part of the hon. Gentleman's question showed that he had thought up his supplementary question before listening to my answer. I am delighted that the debt of the poorest countries in the world was put firmly on the political agenda by the Venice summit, and I am pleased that the summit called for a solution to those problems by the end of the year.

Mr. Stanbrook

What is the advantage of a loan, as opposed to a grant, to a developing country? After all, a loan only imposes further burdens on the developing country to repay the money, which is precisely what the original money was intended to assist it with.

Mr. Patten

There is a great deal of wisdom in my hon. Friend's question. That is one reason why we have a record on retrospective terms adjustment that is pretty well second to none.

Mr. Holland

I congratulate the Minister on his reappointment and commiserate with him over the constraints that he will find on funding for his portfolio. Surely the reality is that, in relation to sub-Saharan Africa, the Venice summit delivered nothing at all. It is imperative to write down and write off a major share of the debt of the sub-Saharan African countries, especially at a time when the most recent OECD report shows that the total resource flow to those countries has fallen by nearly a half since 1981.

The Minister says that he will do something about debt, but what is he doing on aid? We are discussing grants, the issue raised by the hon. Member for Orpington (Mr. Stanbrook). The British overseas aid programme has now fallen to 0.32 per cent. of gross national product, despite the assurances given by the Minister to Tory candidates only last month that the real value of the aid programme would be preserved.

Mr. Patten

First, I am grateful for the hon. Gentleman's kind words. Secondly, I am sure that my right hon. Friend the Chancellor will be pleased with the hon. Gentleman's endorsement of his sub-Saharan African debt initiative. Thirdly, our aid programme has increased in real terms since 1983.

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