HC Deb 22 January 2003 vol 398 cc310-1W
Mr. Lazarowicz

To ask the Secretary of State for International Development if she will make it her policy to support the establishment of criteria for debt cancellation which are based on the resources needed by a country to meet the Millennium Development Goals. [92355]

Clare Short

Debt relief alone cannot deliver the resources needed to meet the Millennium Development Goals (MDGs), and significant new resources will be required. Developing countries generally, not just heavily indebted poor countries face a financing gap in meeting the MDGs. Further debt relief to HIPCs would not be an effective way of generating additional resources. Most bilateral creditors, like the UK, have already written off all or nearly all of the debts from HIPCs, so further relief would have to come almost entirely from existing resources provided by the multilaterals, such as the World bank. This would mean skewing money away from other equally poor non-HIPC countries, which might have better policy environments than some HIPCs. This is why we have focused on debt relief as a means of ensuring debt sustainability, and why additional donor resources will inevitably be needed to meet the MDGs.

John Robertson

To ask the Secretary of State for International Development what action she is taking to encourage multi-national companies to co-operate with heavily indebted poor countries. [92513]

Clare Short

The UK is concerned about the issue of creditor participation in the HIPC Initiative. Debt relief from commercial creditors accounts for only 4.4 per cent. of HIPC relief, but the potential costs to HIPC countries in terms of administrative and legal costs are much higher. We have raised this with the World Bank and the IMF, and at the G7 Summit in Kananaskis in June 2002. Bank and fund staffs are increasing the pressure on non-participating creditors. We welcome the decision last September to publish details of creditor participation—something we had pressed for—and we hope that it will increase international pressure on all creditors to deliver their share of relief. We have also asked the World Bank and the IMF to come forward with more proposals to promote creditor participation, such as a donor-funded technical assistance facility to provide legal advice to HIPC countries facing litigation. Staff are currently preparing a paper.