§ Lord Hyltonasked Her Majesty's Government:
Given the substantial increases in the indebtedness of developing countries over the last 15 years, and its harmful internal and external consequences, what measures they are studying or proposing, whether bilateral or multilateral, to address the situation and to increase net receipts of appropriate aid; and
Whether they will encourage the writing-off of commercial loans to the poorest debtor countries, together with exchanges of debt for equity and other measures to limit the foreign exchange obligations of poor debtor countries.
§ The Secretary of State for Trade and Industry (Lord Young of Graffham)The Government continue to monitor developments on international debt closely, in close consultation with other developed and developing countries, in a range of international forums. For middle income debtors, the bulk of the 1653WA debt is owed to commercial banks. The management of these debts is a matter for the banks and the countries concerned. The Government welcome the development of a growing range of market-based methods for the management of such debts, including the use of debt-equity swaps. Progress in overcoming debt problems will depend largely on the reform efforts of the developing countries themselves in conjunction with IMF and World Bank programmes. The responsibility of industrial nations is to maintain sustainable growth in the world economy and to keep their markets open to developing countries' exports and their investors free to invest in developing countries.
In the case of the poorest most indebted countries, external debts are largely owed to official creditors. Following the Chancellor of the Exchequer's initiative at the Interim Committee meeting of the IMF in April 1987, the Paris Club of Official Creditors has now agreed to offer concessional terms when rescheduling the debt of eligible countries. The Chancellor of the Exchequer also called for the conversion of old aid loans into grants. The UK has written off almost £1 billion of old aid loans, £275 million in Sub-Saharan Africa. The UK's overseas aid budget programme for 1988–89 is substantial—over £1.3 billion in 1988–89, and projected to grow in real terms in later years.