Multilateral Lending Institutions

HC Deb 26 October 1992 vol 212 cc772-3

42. Mr. Denham

To ask the Secretary of State for Foreign and Commonwealth Affairs whether he will make a statement on the relief of debt owed by developing countries to multilateral lending institutions.

Mr. Lennox-Boyd

The multilateral lending institutions do not reschedule debt because to do so would threaten their ability to provide new loans to developing countries.

Mr. Denham

Is the Secretary of State aware that, as a result of the policies that he has described, the poverty-stricken countries of sub-Saharan Africa sent back to the International Monetary Fund $2.2 billion more than they received in new loans during the past eight years? Is he also aware that last year the IMF received $400 million more in debt repayments than it paid out in new loans? Does he accept that that is completely unacceptable for poverty-stricken countries, that the policies that he has outlined are not working, and that they are denying poverty-stricken countries the money that they need to recover? Will he pledge the Government to work within the IMF to change the disastrous policies that he has advocated?

Mr. Lennox-Boyd

No. The hon. Gentleman is wrong. While the multilateral institutions do not reschedule debt, there are opportunities whereby the World bank and the IMF make new loan agreements with concessionary terms, which often help those countries. The hon. Gentleman is wrong in his allegation that the developing world paid back more in 1990 than it received in assistance in the form of aid. Under the Trinidad terms, which the hon. Gentleman might well study for his own benefit, aid debt was written off for many countries. Under the accounting procedures that I have explained before to the House, that appears as a write-off, when it is merely a rescheduling and a forgiveness of the debt by the lending country.

Mr. Ottaway

Following my hon. Friend's comments about the Trinidad terms, which were a welcome initiative by the Prime Minister, is there any possibility of extending them?

Mr. Lennox-Boyd

I am grateful to my hon. Friend. So far, eight countries have benefited from the Trinidad terms—six are in Africa, and we have been discussing it this afternoon. The Paris Club is meeting this week and there might be two more beneficiaries by the end of the week —Mali and/or Honduras. My hon. Friend is right to point out that my right hon. Friend the Prime Minister initiated the terms, which have been of such benefit to the developing world.