§ Mr. ReedTo ask the Chancellor of the Exchequer if he will make it his policy to promote a bankruptcy process for nations burdened with unpayable debts. [34760]
§ Mr. BoatengOver the past three years, the Government have been working with our G7 partners to reform the international financial architecture and to deliver an international financial system that is less prone to crises and better able to withstand them when they occur. A key component of this reform effort has been the development of a new framework for private sector involvement in crisis prevention and resolution which ensures that all parties who benefit form the international financial system play their part in maintaining stability.
119WRecent experience has highlighted some of the legal and practical obstacles that may prevent countries with unsustainable private debt burdens from restructuring those debts in a timely and orderly manner. An international bankruptcy procedure has the potential to address some of these obstacles and thereby improve the overall operability of the crisis resolution framework. The Government therefore welcome the recent proposal by the IMF to explore options for establishing a new Sovereign Debt Restructuring Mechanism.
Separately, the UK continues to work hard to ensure that the Heavily Indebted Poor Country (HIPC) initiative delivers a sustainable relief from debt for eligible countries. We also call on other countries to follow our leads on bilateral policies, such as 100 per cent. relief at Decision Point, and in holding payments in trust for those countries yet to receive debt relief. Already 24 countries have qualified for debt relief, and they will benefit from over $56 billion in debt reduction, which will bring their debts to below the average of developing countries.