HL Deb 19 July 2001 vol 626 cc1577-80

3.14 p.m.

Lord Watson of Richmondasked Her Majesty's Government:

What steps they will take to persuade the World Bank and International Monetary Fund to achieve total debt cancellation for the poorest countries.

Lord McIntosh of Haringey

My Lords, the UK and the other G7 members offer 100 per cent debt relief under the Heavily Indebted Poor Countries (HIPC) scheme. The IMF and the World Bank are also making substantial debt reductions as part of HIPC to bring debt to sustainable levels. For the IMF and the World Bank to apply 100 per cent relief would concentrate resources on countries that are heavily indebted at the expense of those that are equally poor but not heavily indebted, such as Bangladesh. It must be remembered that the IMF and the World Bank's activities are wider than debt relief and we must support them in their work in all poor countries, in particular in areas such as health and education.

Lord Watson of Richmond

My Lords, I am grateful to the noble Lord for that reply. Perhaps I may remind him that although the G7 countries, including the United Kingdom, have taken major steps in terms of debt relief, the IMF and the World Bank themselves still insist on greater than 50 per cent repayment. While that situation pertains, the existing HIPC countries are forced to pay more in debt repayment than they are able to spend on healthcare. Given that the Chancellor of the Exchequer is chairman of the most powerful of the IMF committees, when are we going to do something to rectify that situation?

Lord McIntosh of Haringey

My Lords, I hope that I made it clear in my first Answer that the priorities for the IMF and the World Bank are slightly different from those for ourselves and the other G7 countries. They have responsibilities not only for the heavily indebted poor countries, but also for those countries which are desperately poor, such as Bangladesh, Nepal and Cambodia, which have grave problems, in particular in health and education. Those nations should have their share among the priorities, rather than concentrating on debt relief.

Lord Grenfell

My Lords, perhaps I may begin by declaring an interest as a former employee of the World Bank. Can my noble friend on the Front Bench assure the House that at the G8 Summit to be held in Genoa, Her Majesty's Government will vigorously oppose the expected proposal of the United States Government that 50 per cent of the highly concessionary loans from the International Development Association, which is the concessionary lending arm of the World Bank, should be in grant form? Does he agree that this would be a certain way of ensuring the eventual drying-up of this extremely valuable source of concessionary finance? Does he also agree that if President Bush wishes to see a greater amount of concessionary finance going to the poorest countries, he might care to look at his own aid programme, which at present amounts to a derisory 0.1 per cent of GNP?

Lord McIntosh of Haringey

My Lords, I do not wish to anticipate in detail the negotiations which will take place in Genoa. However, the points made by my noble friend are valid. I am sure that they will he raised in discussion.

Baroness Gardner of Parkes

My Lords, with regard to debt cancellation, are steps being taken to ensure that the money thus released then goes to help the people rather than simply to a corrupt government? Can we do anything to ensure that the right policy is followed?

Lord McIntosh of Haringey

Yes, my Lords, we can. It has been a feature of the HIPC initiative that we have to be satisfied that the debt relief; namely, the money released which would otherwise be spent on debt repayment, is used for the benefit of the people rather than for the governments. In addition, we have protected ourselves against unproductive expenditure, for example, by denying export credits where otherwise they would have been called for.

Lord Hylton

My Lords, does the noble Lord agree that the process of writing off virtually unrepayable debts has been dragged out over an extremely long period? That has caused a great deal of dissatisfaction. In addition to the valuable point made by the noble Lord as regards ensuring improvements in health and education for the poorest people, will the Government also bear in mind the importance of creating jobs for those people?

Lord McIntosh of Haringey

My Lords, of course no one can be satisfied other than with immediate action being taken as regards all the countries concerned. However, bearing in mind the valid point made by the noble Baroness, Lady Gardner, I do not think that this has been such a bad story. One year ago, of the 41 eligible HIPC countries, 10 had reached decision point to the extent of 15 billion dollars. This year 23 countries have reached decision point to the extent of 53 billion dollars. I am grateful for the remarks made by the noble Lord, Lord Hylton, about the importance of health and I can confirm that the Global Health Fund is expected to reach 1.5 billion dollars by the end of the Genoa meetings, towards which the UK has contributed 200 million dollars.

The Earl of Sandwich

My Lords, does the noble Lord agree that this Government constantly advertise that they are providing 100 per cent debt relief? However, following on from the question put by the noble Lord, Lord Hylton, is it not the case that hardly any country has in fact achieved the level of 100 per cent debt relief for the reasons given? Can the Minister confirm that position and tell the House which countries have reached 100 per cent relief?

Lord McIntosh of Haringey

My Lords, I have given the number of countries and the amount of money—23 countries out of the 41 have reached decision point, and the amount of money concerned is now 53 billion US dollars. This is a significant improvement on the position only a year ago. In addition, some countries, including the United Kingdom, are holding these receipts in trust for those countries for when they achieve the decision point and completion point.

Baroness Williams of Crosby

My Lords, given the Minister's robust and acceptable reply to the question of the noble Baroness, Lady Gardner, about corruption, does he accept that it takes two parties to deal with this issue effectively, and that the United Kingdom and other wealthy countries ought to do their very best to prevent money laundering? Does he further accept that many millions of dollars have fled from Nigeria and Indonesia, some of them to Swiss, British and American banks?

Lord McIntosh of Haringey

My Lords, I am sorry to say that I have no reason to doubt what the noble Baroness says. I am sure that significant amounts of money slip through the cracks. However, there is a paper, Debt Relief and Beyond, which has been drawn up by the finance Ministers and will be presented at Genoa this week. I believe that this is one of the issues which will be addressed in that paper.

Baroness Trumpington

My Lords, can the Minister tell me whether Zimbabwe is one of the relevant countries?

Lord McIntosh of Haringey

My Lords, not off-the-cuff. I am sorry. I shall write to the noble Baroness, Lady Trumpington.