Sub-Saharan Africa: Debt (Hansard, 7 January 2003)

§ The Earl of Sandwich
asked Her Majesty's Government:
What plans they have to move beyond the enhanced heavily indebted poor countries initiative towards full debt sustainability in sub-Saharan Africa.

§ Lord McIntosh of Haringey
My Lords, the recent global economic slowdown and weaker commodity prices pose a threat to debt sustainability in sub-Saharan Africa. The Government have been at the forefront of the international debate on debt relief issues and continue to press for the rapid and full implementation of the heavily indebted poor countries initiative. However, debt relief alone cannot guarantee a permanent exit from unsustainable debt and poverty. That is why we are promoting greater effectiveness in the delivery of aid, more open markets for exports from developing countries, investment, and an increase in development assistance.

§ The Earl of Sandwich
My Lords, I am grateful to the Minister for that full reply. He is right to say that it will be some time before governments can spend as much on health and education as, for example, on the servicing of debt. However, does the Minister accept that there are unrealistic forecasts on which debt sustainability is based? For Mozambique, there is a forecast of 16 per cent export growth per annum, which is almost unobtainable. Such forecasts take little account of emergencies such as the floods that have been experienced and the effect of HIV/AIDS. I hope that the Government can give some assurance that such factors are taken into account.

§ Lord McIntosh of Haringey
My Lords, the noble Earl, Lord Sandwich, is right. It is true that, in several 888 countries, there are over-optimistic assessments of the possibility of increased exports. If we consider the fact that the world aid budget is of the order of £50 billion a year, while developed countries spend £350 billion a year in agricultural subsidies, we can see how much scope there is for improvement through world trade.

Lord Renton
My Lords, it has been suggested in the press that the food crisis in Zimbabwe is entirely due to the policy of the Zimbabwe Government. Has the Minister any information on that?

§ Lord McIntosh of Haringey
My Lords, it is seldom that there is a single, simple explanation for such an issue. The food crisis in Zimbabwe is partially the result of government policies—but only partially.

§ Lord Judd
My Lords, does my noble friend the Minister accept that many of us strongly admire the international lead that the British Government consistently give on debt? Does he also agree, however, that if any policy on third world development is to be successful, one of the most crucial issues is the quality of governance in those societies?

§ Lord McIntosh of Haringey
My Lords, Gordon Brown and Clare Short will be glad to hear what the noble Lord, Lord Judd, has just said; it is undoubtedly true. When we talk about the effectiveness of aid, what we are discussing is whether it actually reaches the people most in need—the people in poverty. That is, of course, an issue of governance.

§ Baroness Northover
My Lords, does the Minister agree that the HIV/AIDS crisis presents problems on a new scale? For example, Zambia spends three times as much on debt relief as on health, yet 13 per cent of Zambia's children are AIDS orphans and 20 per cent of the adult population live with HIV/AIDS. Does the Minister agree that the crisis has reached the point at which we should be discussing, not debt relief, but debt cancellation?

§ Lord McIntosh of Haringey
My Lords, the problem with all the countries is that poverty is not necessarily the same as indebtedness. For example, Bangladesh is extremely poor—one of the poorest countries in the world—but has little international debt. Debt cancellation is not the way forward. The way forward, as I said in my Answer and as the Government say in their international financing facility, is a clear and binding commitment of additional resources by donors. That may be associated with debt relief but not necessarily so.

§ Lord St John of Bletso
My Lords, can the Minister elaborate on the measures that Her Majesty's Government propose to enhance the HIPC initiative and offset debt caused by unforeseen emergencies such as the terrible drought and the floods in Mozambique several years ago?

§ Lord McIntosh of Haringey
My Lords, as has been said, the United Kingdom Government are in the lead. 889 Internationally, an additional £1 billion a year has been allocated for the purpose. As, I hope, I made clear, the problems do not arise because the HIPC initiative is not working. They arise because, at the end of the HIPC process, as a result of the slow-down in the international economy and the collapse of commodity prices, countries that have been through the HIPC initiative are still in a position of unsustainable debt.

§ Baroness Rawlings
My Lords, the noble Lord says that the enhanced HIPC initiative is working. However, is it not the case that 15 countries have not even reached their decision-point? In other words, a third of heavily indebted poor countries have received no debt relief under the initiative. Does the noble Lord agree that there must be a radical revision of the terms of the initiative, so that more countries can qualify for debt relief in 2003?

§ Lord McIntosh of Haringey
My Lords, the HIPC initiative is not set in stone. It is possible for additional countries to enter HIPC, and it is also true that the conditions—completion dates, for example—can be changed. I have tried to persuade the House that there are huge problems that are not simply questions of the composition of the HIPC initiative; they are more widespread than that.