HC Deb 17 July 2003 vol 409 cc570-1W
Mr. Caton

To ask the Minister of State, Department for International Development how the Department will help ensure that the UK's beyond heavily indebted poor countries additional debt relief will be used to tackle poverty in indebted countries. [125816]

Hilary Benn

Before a country can qualify for debt relief under the Heavily Indebted Poor Countries (HIPC) Initiative, it must produce an interim Poverty Reduction Strategy Paper (PRSP) at Decision Point— the first stage of the HIPC process—setting out what action it will take to develop a full PRSP. To reach Completion Point—the final stage when the relief becomes irrevocable—the full PRSP must be in place, and under implementation for at least one year. The PRSP sets out the policy action governments are taking to reduce poverty, and also provides a budgetary framework not only for spending the savings from debt relief but also for allocating all other aid and government revenue so that they have the greatest impact on poverty reduction.

We believe strongly in the value of the PRSP process, which is leading to improved economic management and social reform. The UK Government goes further than is required under HIPC and provides 100 per cent, debt relief to countries when they qualify for HIPC relief. In addition, all payments received by HMG from HIPC countries will be held in trust and returned to countries when they qualify for HIPC relief, so that they can invest more resources in poverty reduction programmes. For the 26 countries that have qualified for HIPC so far, spending on education and health in these countries is set to rise by some US$4 billion each year. On average, their debts will be reduced by around two-thirds, and social expenditure will be nearly four times higher than spending on debt servicing. The UK is also aligning its bilateral development assistance programmes with the PRSPs.