HC Deb 26 April 1990 vol 171 c476
15. Mr. Allen

To ask the Chancellor of the Exchequer what assessment he has made of the impact of his interest rate policies on Third world debt.

Mr. Lilley

Sterling interest rates have relatively little impact on developing countries as less than 5 per cent. of their debt is denominated in sterling and some of this will be at fixed or concessional rates.

Mr. Allen

Is the Minister aware that Japan's economic problems will mean that that country will be keeping more of its surplus capital at home and that German reunification will mean the same for Germany, the other major lender in the world? Where will the major debtor nations, of which Britain and the United States are among the most prominent, get their hot money from? Will not it be from the Third world nations, which are already suffering a net outflow of capital?

Mr. Lilley

No, I do not think so. There are vast quantities of money in the world ready to go to countries where there are excellent investment opportunities, as there are in the United Kingdom.

Mr. Andrew Mitchell

Have not the Government made a particular contribution to assist Third world countries faced with that problem by converting a large amount of Government debt into grant? Is not that particularly true in respect of sub-Saharan Africa?

Mr. Lilley

My hon. Friend is absolutely right. The Government have forgiven some £1 billion of debt to the 27 poorest countries. That was the right thing to do and will be welcomed on both sides of the House.