§ Mr. LazarowiczTo ask the Secretary of State for International Development what her policy is on 100 per cent. cancellation of low-income country multilateral debts. [92985]
§ Clare ShortWhile it is essential to deal with the problem of unsustainable debt in the poorest countries as part of our efforts to assist in eradicating poverty, complete cancellation of debt is not required; nor is it the most effective means of delivering aid resources to reduce poverty. We do not support the proposal for 100 per cent. cancellation of IMF and World bank loans, which is neither desirable nor equitable. For these institutions to provide 100 per cent. relief would risk skewing limited development resources away from other very poor countries, which have handled their debt well. Countries need to borrow—initially only on very concessional terms—to finance their poverty reduction strategies. In this way, they can re-establish their creditworthiness, which will also help them attract private investment and accelerate economic growth and poverty reduction.