HL Deb 17 April 2000 vol 612 cc451-3
Baroness Whitaker

asked Her Majesty's Government:

Whether the improvements to the heavily indebted poor countries initiative for developing countries have produced the faster, wider and deeper debt relief which was intended.

Baroness Amos

My Lords, five countries have qualified for relief under the enhanced heavily indebted poor countries initiative. That is disappointing because the target was for 11 countries to have qualified by the spring meetings of the World Bank and the IMF, which are taking place now in Washington. We are pressing the bank and fund to speed up the process.

Baroness Whitaker

My Lords, I thank my noble friend for that Answer, which is rather discouraging. In view of the crucial importance of the initiative, will she say whether all 25 of the countries targeted to have met the goal by the end of the year will have done so?

Baroness Amos

My Lords, I agree with my noble friend that the situation is somewhat disappointing. However, we must remember that the improvements to the HIPC process were agreed only in September last year. We set ourselves a number of ambitious targets. We remain committed to those targets. In particular, we welcome the IMF committee's agreement yesterday in Washington to establish a joint World Bank/IMF implementation committee to oversee implementation of the HIPC initiative. We hope that we shall achieve our target by the end of the year.

Baroness Rawlings

My Lords, I accept the importance of debt relief and that those funds were granted by well-informed, trained people, but will the Minister tell the House what Her Majesty's Government are doing to persuade the governments concerned not to spend the debt savings on defence and private whims, but instead to ensure more responsibility and more transparency in government to minimise corruption? Are the Government supporting the IMF's decision regarding Uganda?

Baroness Amos

My Lords, the IMF has not yet made a decision in relation to Uganda. As I understand it, concerns were expressed about an element of spending by Uganda, which has been entirely transparent. It is an element that was predicted by Uganda. The IMF is considering it.

With respect to the noble Baroness's other questions, the HIPC 2 initiative is linked clearly to developing countries producing poverty reduction strategies which will ensure that debt relief is then spent on matters such as education and heals h. As part of that process, those countries are expected to consult with civil society organisations, with the international financial institutions themselves and with donor countries. There is transparency and there is clearly a commitment to cutting down on corruption.

Viscount Waverley

My Lords, once resolved, what measures will be put into place to protect against such forms of indebtedness arising again, including tiding due recognition of disaster periods?

Baroness Amos

My Lords, of course we want to ensure that countries do not get into debt in the first place. That is why the kind of review currently taking place, such as the export credit guarantee scheme, for example, is important. I have already mentioned in my reply to the noble Baroness, Lady Rawlings, that the international financial institutions are tying debt relief to poverty reduction strategies. The IMF will tie poverty reduction and growth facility lending to poverty reduction strategies. We must, of course, try to ensure that developing countries achieve economically so that they can come out of debt in the first place.

Lord Rea

My Lords, can my noble friend say whether it is too early to see any increase in social spending in the countries affected by the HIPC initiative, which she has said that the initiative ensures? If that is not visible already, can she speculate as 1.0 when we are likely to see such an increase?

Baroness Amos

My Lords, the rationale of debt relief is to allow countries to make progress on poverty. It is too soon to see any impact on poverty in the countries that have taken part so far. However, the effect on poverty spending so far has been encouraging. Uganda, for example, put the debt relief into a poverty action fund, which has given the debt/ poverty link a local political importance. So far that fund has allocated money to primary education. Before the floods, Mozambique had made important progress on health spending and Guyana, which has had some social unrest, has increased its social spending above the target. While it is too soon to see the detail of the change, we can see some evidence of it already.

Lord Skelmersdale

My Lords, many of these countries suffer from a lack of water. One of the most important things that can be done by the international community is to ensure that water retention schemes are carried out and that wells are dug in those countries. Does that matter fall within the category of the Question?

Baroness Amos

My Lords, it is important to remember that debt relief is not the only mechanism that we are using to assist developing countries in respect of their long-term sustainable development. It is one part of the process. In terms of our own development assistance to countries, we have now taken what is called a sector-wide approach by which we shall agree with the government of each country the areas in which we shall work. In a number of countries water and sanitation are key priorities and we lead in those sectors. I agree with the noble Lord that that is important in terms of the long-term, sustainable development of a number of developing countries.

The Earl of Sandwich

My Lords, can the Minister say whether the Government, in the form of the Chancellor, could lodge a complaint with the IMF about the case of Uganda? No developing country has done more to put poverty alleviation strategies in place. If Uganda cannot make it work, none of the other countries will follow.

Baroness Amos

My Lords, we believe that Uganda has produced an excellent poverty reduction strategy. It has been entirely transparent about its proposed spending. I understand that the discussion with the IMF relates to the purchase of a jet and we shall have the result of that discussion as soon as possible. We shall continue to press the IMF to make a decision as quickly as possible.