HC Deb 28 February 2002 vol 380 cc1426-9W
16. Ann McKechin

To ask the Chancellor of the Exchequer what assessment he has made of the impact of the heavily indebted poor countries' debt relief process in delivering a sustainable exit from debt for eligible countries. [35759]

Ruth Kelly

The UK continues to work hard to ensure that the heavily indebted poor countries (HIPC) initiative delivers an exit from unsustainable 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 25 countries have qualified for debt relief, and they will benefit from over $60 billion in debt reduction, which will bring their debts to below the developing countries average.

Indeed, just last week Ghana reached decision point qualifying for $3.7 billion of debt relief from the international community, and the UK is playing its part writing off over £200 million of debt owed by Ghana.

At their meetings in November last year, both the International Monetary and Financial Committee (IMFC) and the IMF and Development Committee of the World Bank and the IMF, recognised that lower global growth prospects and declining terms of trade are likely to adversely affect many low-income countries. The IMFC, chaired by the Chancellor, called on the IMF, in close collaboration with the World Bank, to respond flexibly and proactively to the needs of Heavily Indebted Poor Countries (HIPCs), including through additional concessional financing and debt relief where appropriate.

Dr. Tonge

To ask the Chancellor of the Exchequer what plans he has to discuss the reform of the HIPC initiative to ensure that debt sustainability is consistent with achieving the 2015 development goals at the Financing for Development Conference in Mexico in March. [39254]

Ruth Kelly

The UK Government continue to work hard to ensure that the heavily indebted poor countries (HIPC) initiative is a success and that it delivers a robust exit from unsustainable debt for eligible countries. The UK has been pushing to ensure that both donor countries and the international financial institutions respond flexibly and proactively to the needs of HIPCs in the current economic climate, and help those HIPCs that have yet to benefit from debt relief (such as those in conflict). In addition, the UK has pressed for all countries participating in the Financing for Development Conference in Monterrey, Mexico in March, to agree that future reviews of debt sustainability should also bear in mind the impact of debt relief on progress towards the achievement of the development goals contained in the Millennium Declaration (as can be seen from the draft Monterrey Consensus outcomes document, available at http://www.un.org/esa/ffd/).

Dr. Tonge

To ask the Chancellor of the Exchequer what plans he has to discuss greater and faster debt relief with(a) the International Monetary Fund, (b) the World Bank and (c) the regional development banks. [39253]

Ruth Kelly

The UK Government have consistently been at the forefront of the international debate on debt relief issues, and have repeatedly pushed for the process to be speeded up.

Out of 42 HIPCs in total, the UK Government are pleased that 25 have already reached decision point. However, most of the remaining countries are in conflict or have governance problems. For this reason the UK Government argued strongly last year for the creation of an International Monetary Fund post-conflict assistance account, and the UK is the first country to make a contribution.

This account will help these countries to make progress towards peace, good governance and a sound economic framework so that they can secure the full benefits of debt relief under the HIPC initiative.

Moreover, in November last year, in his role as chair to the International Monetary and Financial Committee of the International Monetary Fund, the Chancellor urged the World Bank and IMF to update their debt sustainability analyses in light of the global economic slowdown and declines in terms of trade. We should be proactive and flexible in order to supply additional debt relief at completion point for HIPCs, to ensure that the initiative delivers a robust exit from unsustainable debt.

The United Nations Financing for Development Conference in Monterrey, Mexico in March and the spring meetings of the International Monetary Fund and the World Bank in April will provide an opportunity for the UK Government to discuss greater and faster debt relief with international financial institutions.

Dr. Tonge

To ask the Chancellor of the Exchequer what plans he has to discuss his proposal to hold the debt repayments of those countries without agreed poverty reduction strategy papers in a trust until a PRSP is agreed with other donor countries at the Financing for Development Conference in Mexico in March. [39255]

Ruth Kelly

The UK Government continue to use international meetings to push other donor countries to follow the UK's lead on its "hold in trust" policy, and hold all debt payments in trust for the day they can be returned to fund poverty reduction for all countries still to secure debt relief under the heavily indebted poor countries (HIPC) initiative because of civil wars, external conflict or the absence of a poverty reduction programme. We also urge other countries to continue to help those heavily indebted poor countries (HIPCs) that have yet to benefit from debt relief by providing them both technical and financial assistance on concessional terms and this year, we have spent £130 million on technical advice and capacity building, to support the PRSP process.

Dr. Tonge

To ask the Chancellor of the Exchequer what plans he has to discuss the reform of poverty reduction strategy papers to take account of the financial resources required to achieve the 2015 development goals at the Financing for Development Conference in Mexico in March. [39256]

Ruth Kelly

The UK Government have been at the forefront of pressing for the development of Poverty Reduction Strategy Papers as a key element of the HIPC debt relief process. PRSPs already provide an excellent framework for countries to set out their own spending priorities and needs, in order to achieve country owned goals, including the Millennium Development Goals.

However, so far only 10 full PRSPs have been prepared although more than another 30 are under preparation. At the Financing for Development Conference the UK Government will continue to press for the development of well designed and costed PRSPs in all eligible countries. The UK Government will also continue to be calling for a substantial increase in development assistance in order to provide the financing required to meet the Millennium Development Goals.