§ Mr. MeacherTo ask the Chancellor of the Exchequer what initiatives he has undertaken during the United Kingdom's presidency of the European Community to assist the developing world to reduce its external debt.
§ Mr. Nelson[holding answer 19 November 1992]: Following the Prime Minister's Trinidad terms initiative, the Paris Club has been giving enhanced debt relief to the poorest and most indebted countries since the beginning of this year. Twelve countries have so far benefited. The enhanced terms include cancelling 50 per cent. of the debt payments falling due over the period of the debtor's IMF 50W programme, and offering the possibility of a 50 per cent. reduction in the entire stock of debt after three to four years if the debtor keeps to its IMF and Paris Club agreements. The United Kingdom has consistently pressed for these terms to be made more generous still, in line with the Prime Minister's original Trinidad terms proposals, involving an immediate two thirds reduction in the entire stock of debt. At the Munich summit in July, the United Kingdom joined with the rest of the G7 in calling for the Paris Club to recognise the special situation of some highly indebted lower middle income countries on a case-by-case basis.
§ Mr. DenhamTo ask the Chancellor of the Exchequer (1) if he will list the countries which have received debt relief under the Trinidad terms; and if he will give details in each case of(a) the debt cancelled by the United Kingdom and (b) the debt cancelled by all Paris club Governments;
(2) what percentage of official bilateral debt owed to Great Britain by developing countries has been cancelled under the Trinidad terms.
§ Mr. Nelson[holding answer 26 November 1992]: Twelve countries have benefited from Trinidad terms so far. They are Benin, Bolivia, Equatorial Guinea, Guinea Republic, Honduras, Mali, Nicaragua, Sierra Leone, Tanzania, Togo, Uganda and Zambia.
Around £1 billion has been written off, of which the United Kingdom's share is some £65 million.
Under the terms of the rescheduling agreements, debt payments due over the period of each debtor's IM F programme have been reduced by 50 per cent., though the United States and, on occasion, Australia, have adopted a non-concessional rescheduling option. The rescheduling agreements also include a good will clause committing the Paris Club to consider giving relief on the whole stock of debt after three to four years if the debtor adheres to Paris Club and IMF agreements.
Figures for the actual debt owed by or cancelled for any individual country are confidential. We cannot publish these figures without the consent of the authorities in both debtor and creditor countries. For several debtor countries discussions on detailed terms are, in any case, still under way.
Early progress is very unlikely on any of these fronts owing to the resolute opposition of other creditors, especially the United States and Japan.
There has been a certain amount of pressure from the aid lobby for the United Kingdom to
deliver on its commitment to the unilateral implementation of Trinidad terms".But it would not be in our interests, nor really in the interests of the poorest countries, to go beyond the multilateral compromise. Debts to the United Kingdom are only 5 per cent. of the debts of the poorest, and going beyond the consensus would sacrifice leverage of the kind effectively deployed at Harare, and only succeed in marginally increasing the recoverability of other's claims at our expense.
Debts cancelled under Trinidad terms result from insurance claims paid out to United Kingdom exporters by ECGD after a sovereign default. Debts to export credit agencies constitute the majority of developing country debts, and, unlike most aid loans, are at commercial interest rates. Many countries have forgiven substantial amounts of aid debts, including the United Kingdom. 51W About half of the $1 billion relief provided by the Overseas Development Administration represents the conversion of Indian hard currency debt into a local currency obligation.