Sub-Saharan Africa (Hansard, 25 March 1996)

§ 26. Mr. Hain
To ask the Secretary of State for Foreign and Commonwealth Affairs what assessment his Department has carried out of the impact of debt on the provision of basic social services in sub—Saharan Africa; and if he will make a statement. [20706]

§ The Minister of State, Foreign and Commonwealth Office (Mr. Jeremy Hanley)
We are concerned about the low level of basic social services in sub-Saharan Africa. When debt reaches unsustainable levels, it has an impact on the whole of a country's economy, including the social sectors. That is why we have taken action, and why we are pressing for more action, to reduce to sustainable levels the debt of the poorest, most indebted countries and those which are pursuing sound economic policies.

§ Mr. Hain
The Minister's reply does not measure up to the scale of the problem. There is now £135 billion of debt in sub-Saharan Africa—more than three quarters of the region's annual income. Surely the Government should be supporting measures such as the use of World bank reserves, special drawing rights and the sale of International Monetary Fund gold stocks? If that action is not taken, sub-Saharan Africa will continue to drown in debt and there will be no possibility of eradicating the enormous poverty problems, let alone of rebuilding the economies. Will he discuss such proposals to solve the problem with the Debt Crisis Network?

§ Mr. Hanley
I accept that debt is a serious problem, but Britain has been ahead of most countries in dealing with it. The British Government have written off aid debts of 31 of the world's poorest countries—to the value of £1.2 billion—and for many years all new aid to the poorest countries has been on grant terms so as not to increase their debt burden. The British Government have also taken the lead in pressing for solutions to the official bilateral and multilateral debt burdens of the poorest and most indebted countries. I believe that we have made excellent progress.

§ Mr. Jacques Arnold
Is not one of the principal ways to help sub-Saharan Africa cope with its debt the writing off of the public sector debt to those countries? Is it not worth bearing in mind that it was a Tory Chancellor of the Exchequer who first put that idea forward at the Trinidad conference, which brought about the Trinidad terms which have already done so much to help those countries with their public debt problem?

§ Mr. Hanley
My hon. Friend is absolutely right. At the Paris club of Government creditors, 14 countries have now benefited from the Naples terms reschedulings which, as my hon. Friend says, were first introduced in 1990 by my right hon. Friend the Member for Huntingdon (Mr. Major) as the Trinidad terms. The British Government have also pressed for action on multilateral debt. At last year's annual meetings of the IMF and the World bank, it was our Chancellor who called on all international financial institutions to examine further measures to deal with the problems of multilateral debt for the poorest and most indebted countries. That work is currently under way and we expect firm proposals at the spring 1996 meetings of the World bank and the IMF next month.

§ Miss Emma Nicholson
Is the Minister aware that in Zambia President Chiluba inherited a situation in which his country pays more in debt interest than it can afford to spend on health and education? Given the impact of that on mothers and children, can the Minister assure me 702 that he will do his very best to get Zambia and Tanzania, which has the same problem, included in the new IMF-World bank proposals?

§ Mr. Hanley
It has also been said that United Kingdom aid should not be used to service the debts owed to multilateral financial institutions, as with Zambia. The UK programme of aid to Zambia was used for that purpose in 1994–95, but that was exceptional. Our allowing it enabled the Zambian Government to allocate more of their own money to the health sector, and our aid was directly linked to a World bank programme which included conditionality to protect and enhance the share of public expenditure devoted to basic education and health care services in Zambia. Zambia is one of the countries where there has been great success, and where debt rescheduling has helped tremendously and I believe that Zambia is the better for it.

§ Mr. Foulkes
As countries in sub-Saharan Africa are forced to transfer four times as much to northern creditors as they spend on the health of their citizens, does the Minister agree that much more urgent action on debt is needed? When the Chancellor proposed at the IMF that gold stocks should be sold, he knew fine that it would be almost impossible to get agreement because it would need the support of 80 per cent. of the shareholders. What are the Government doing to get the necessary agreement on debt relief before more innocent children in Africa die? We need urgent action at the IMF, not fine words in the House.

§ Mr. Hanley
I do not mind fine words in the House—it is nice of the hon. Gentleman to say that my words are fine—because the fine words reflect a fine effort. We are making serious progress. After all, sub-Saharan Africa received nearly $1 billion more from the World bank than it paid in debt service in 1993, the last full year. The Paris club of official creditors has made tremendous progress in rescheduling debts, increasing the figure from 50 per cent. to 67 per cent. in suitable cases. As I have said, 14 countries benefited; they include Chad, Guinea, Guinea-Bissau, Cameroon, Mauritania, Senegal, Togo, Uganda and Zambia, and this week there will be a rescheduling for Sierra Leone. So tremendous progress is being made—it is not just fine words.