HL Deb 20 June 2000 vol 614 cc154-6

3 p.m.

The Earl of Sandwich asked Her Majesty's Government:

What progress they expect in the heavily indebted poor countries initiative at the G8 Summit in Okinawa.

Lord McIntosh of Haringey

My Lords, debt is an important issue on the Okinawa Summit agenda. Heads of Government plan to review and encourage progress on the HIPC debt relief initiative with a view to meeting the target set at last year's Cologne Summit of seeing three-quarters of eligible countries receiving debt relief by the end of this year. The UK Government remain committed to this target and will continue to do all they can to ensure that these countries receive the debt relief they so urgently need.

The UK has taken a leading role in the development of the HIPC debt relief initiative and our bilateral policy of 100 per cent debt forgiveness underlines our commitment.

The Earl of Sandwich

My Lords, I am grateful to the Minister for reaffirming the Government's intentions on the HIPC process, although they still fall well short of the 100 per cent target agreed at Cologne. Would he agree that it is time to turn our attention to future World Bank lending? For instance, under its new country assistance strategy, the World Bank is embarking on a 1 billion dollar loan for Tanzania which merely replaces the debt relief of 1 billion dollars that Tanzania has already received. What is the guarantee that the Bank has a new lending policy which will ensure that future loans are based on sustainable strategies, especially in agriculture?

Lord McIntosh of Haringey

My Lords, I am grateful to the noble Earl for his recognition of the outstanding role of the UK Government in these matters. The new lending that is proposed for Tanzania will be on highly concessionary terms. It will be related not only to industrial projects but on the basis of Tanzania's poverty reduction strategy paper. My noble friend Lady Amos referred to that in response to an earlier Question. Therefore, the loan will be for projects such as agriculture, health, rural roads and water.

Baroness Rawlings

My Lords, in the light of the Minister's comment about the UK's leading role and its policy of 100 per cent debt forgiveness, how many countries have received debt cancellation from the British Government under the policy of cancellation of all debts owed to the UK by developing countries? Furthermore, can he tell the House how much debt has been cancelled by the British Government in each case?

Lord McIntosh of Haringey

My Lords, I should have to produce a large table to answer that question in detail, but I can say that our contribution to the HIPC trust fund is the largest in the world, at 350 million dollars. All the G7 countries have agreed to follow our example, with 100 per cent relief on bilateral aid. That is not a bad record.

The Lord Bishop of Oxford

My Lords, the Churches are highly appreciative of the lead taken by the Chancellor of the Exchequer. However, there have been disturbing reports that the high hopes set for the G8 Summit will not be achieved. Are there serious obstacles to achieving the target and, if so, what might they be?

Lord McIntosh of Haringey

My Lords, the first obstacle was to get the item on the agenda. Our officials working on the agenda have overcome that. As I indicated in my Answer, it is now agreed that the item will play an important part on the agenda. Japan, in particular, as host country has made a commitment to that. We shall have to wait and see how the negotiations progress at Okinawa, but I can assure the right reverend Prelate that we are pushing hard for a better outcome from HIPC 2.

Lord Judd

My Lords, would my noble friend not agree that the urgency of the situation is underlined by the consistent fall in levels of development assistance from the wealthy countries of the world, with the honourable exception of the United Kingdom and the lead given by the DfID? In those circumstances, is there not something despicable about the wealthy nations of the world meeting to discuss how they can shore up their wealth without falling in behind the lead given by the Chancellor and others on what we should be doing together to fulfil our responsibilities in the wider world?

Lord McIntosh of Haringey

My Lords, it is not for me to criticise other countries in the way in which they approach the G8 Summit. Of course they come with their own motivation, and our role is to pursue, and to encourage them to pursue, a firm and effective strategy for the reduction of world poverty. After all, it was the Labour Government who pushed for the adoption of HIPC 2, which now covers 38 countries and a total of 100 billion dollars. That is no mean achievement.

Lord Redesdale

My Lords, will the Government consider pushing for a change of rules for the World Bank and the IMF so that they may consider changing from loans, even on a concessionary basis, to grants for social spending? Some countries—for instance, Haiti—have unsustainable debt and they will never be able to repay even the most lenient concessionary loans.

Lord McIntosh of Haringey

My Lords, there will always be a role for grants, particularly for disaster relief. Indeed, referring back to an earlier Question, the European Commission makes a considerable number of grants for this purpose. I believe that loans will always have a major role to play because they enable the provision of relief earlier than would otherwise be possible.

Lord Grenfell

My Lords, I congratulate my noble friend and the Government on their excellent record on debt relief, but would he not agree that while 600 million people live in 40 HIPC countries, many billions living in other developing countries rely heavily on concessionary aid? Would he further agree that ii: is extremely important that while the debt initiative must be properly financed, it should not be an excuse for OECD countries to reduce the rest of their development assistance and thus rob Peter to pay Paul?

Lord McIntosh of Haringey

My Lords, those are wise words from my noble friend.