HC Deb 13 February 1989 vol 147 cc19-20
73. Mr. Cohen

To ask the Secretary of State for Foreign and Commonwealth Affairs what action he proposes to take in the light of the World Bank's report on the growth of international debt.

Mr. Chris Patten

We shall continue to play our full part in implementing the internationally-agreed strategy on debt. We will maintain support through the aid programme for important initiatives recently adopted for the poorest debtors, in which Britain took a leading role.

Mr. Cohen

That is some strategy. The Minister will be aware that that World Bank report showed that the poorer nations paid the richer nations some $43 billion last year and because of compound interest they were still $39 billion further in debt. The Government's strategy is to export privatisation, to soak the resources of those countries and leave them even further in debt. Is that not a recipe for poverty capitalism, rather than popular capitalism?

Mr. Patten

Unusually, the hon. Gentleman is a little wide of the mark. The figures which he quoted are certainly misleading as they take no account of grant aid or of the ability of better off developing countries to repay their debts. The net capital flows to sub-Saharan African countries were strongly positive throughout the 1980s. Even after deducting interest payments they amounted to $15 billion in 1987, the last year for which we have figures. These days very few people would agree with the hon. Gentleman about the importance of market forces. His views seem to be more in line with those of Mr. Ligachev than with those of President Gorbachev.

Mr. Wells

The House owes my hon. Friend a great debt of gratitude for the initiative that he and the Chancellor of the Exchequer have taken to put on the international scene the initiative on sub-Saharan debt, which has been taken a step further at Toronto. Does my hon. Friend believe that the time is now ripe for a further initiative in that area, and that we should extend the initiative on sub-Saharan debt to other countries, such as Guyana in South America? Can he make a statement about that? Is he prepared to take any steps in relation to the debts owed to the World Bank and the International Monetary Fund?

Mr. Patten

It is important to distinguish between the poorest and the most indebted countries and those which are rather better off. It is also important to distinguish between debts that are owed to Governments and international organisations and those which are owed to commercial banks. Whatever happens, I would not endorse the transfer of risks from banks to taxpayers.

We have announced that we have committed support to the programme, which we hope will get off the ground, to encourage economic reforms in Guyana. Canada has led the exercise, but we have said that we will support an agreed IMF-World Bank programme in Guyana. I hope that we can start one very soon.