HC Deb 29 January 2004 vol 417 cc384-6
15. Mr. Desmond Swayne (New Forest, West) (Con)

What progress has been made with respect to debt relief for the poorest countries. [151556]

The Chancellor of the Exchequer (Mr. Gordon Brown)

Twenty-seven countries are already receiving more than $70 billion of debt relief, of which 10 have completed the process. Seven others have not yet received debt relief because they are in conflict; a further three have not done so due to internal instability and governance issues; one other has not applied. A number of other countries, including Sudan, Liberia and Congo, should enter the debt relief process soon.

Mr. Swayne

Does the Chancellor agree that the greatest leverage that we could have on the problems faced by the poorest countries would be provided by giving them greater opportunities to trade with us? What prospect is there of driving forward such an agenda with our principal allies?

Mr. Brown

I am grateful to the hon. Gentleman for raising the issue of trade in the context of debt relief, because we all know that what is needed for countries, especially those in Africa, to move forward is a combination of debt relief, the necessary aid and, most importantly, the development of their economies. That requires them to be able to trade with the developed countries, which is why there is a premium on reopening the world trade talks; that is in everyone's interest. There was an American initiative only a few days ago, and we are hoping for a positive response in greater detail from the European Union. The matter will also be discussed at the G7 in Florida, and there was a meeting of Trade Ministers just before Christmas to consider some of the issues. I hope that we can move forward very quickly, and I believe that once the Singapore issues are cleared from the deck and there has been movement on agriculture, it will be possible that this will genuinely become what was originally called the Doha development round. That means development helping developing countries.

Mr. Torn Clarke (Coatbridge and Chryston) (Lab)

Will my right hon. Friend the Chancellor build on his truly remarkable achievements on debt by bearing in mind in his discussions with the G7 and G8 countries, the World Bank, the International Monetary Fund and so on, the problems of the countries that experience genocide, such as the Democratic Republic of the Congo, which he mentioned? If those countries can make the most of their mineral wealth and share it widely, we shall achieve not only poverty reduction but the millennium goals, to which he is absolutely committed.

Mr. Brown

I am grateful to my right hon. Friend. He has spoken on these issues over many years and visited many of the countries that he is asking us to consider. I have added Congo to my list, although it was previously not regarded as a country that would ever qualify for the heavily indebted poor countries process. However, conflicts are being ended in Congo, Sudan and Liberia. Because of that, although it will cost the international community substantial amounts of money—running into billions of dollars for those three countries—to give the debt relief, it is right that they should be offered the chance to be part of the process. It is also right that we should help them to reconstruct their economies after conflict, and, in particular, that we help them to get their health, education and other social services systems moving so that their people can genuinely see that out of conflict, there is a way forward.

Mr. Alistair Carmichael (Orkney and Shetland) (LD)

Has the Chancellor of the Exchequer considered the terms of the report produced by IMF researchers towards the end of last year, which suggested that the heavily indebted poor countries initiative could be running into difficulties? The report concluded: Unless HIPCs improve their primary fiscal positions or grant financing is sustained at current, or possibly higher, levels, debt sustainability in HIPCs may prove elusive in the long term. Does the Chancellor concur with that assessment of the initiative, and if so, which course would he like to see the HIPCs following: raising taxes or a higher level of aid coming from developed countries?

Mr. Brown

I am grateful to the hon. Gentleman for raising the issue of what will happen now in the IMF and the World Bank. The issue of debt relief will not and must not be forgotten. That is why, when I chair the IMF committee that will meet in Washington in April, and when the World Bank development committee meets, we shall consider that very issue raised by the IMF report. We shall discuss whether we can reach agreement on what is called topping up—that is, getting more money for the poorest countries at the point at which their debts are being written off—and on taking into account some of the changes that have taken place. For example, in some cases commodity prices have collapsed, and in others there have been problems in relation to trade.

Equally, we will have to look specifically at country-by-country solutions for many of those people, which is why the poverty reduction plans that have been produced by the World Bank are very important. In the long run, the way forward, in my view, is the international finance mechanism that we propose. That allows us to do exactly as happened when the World Bank was formed in 1945: to provide a mechanism for financing that involves both the public and private sector but guarantees the up-front money that is necessary if we are to meet the millennium development targets for each country.

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