§ Mr. KirkwoodTo ask the Chancellor of the Exchequer what further plans he has to alleviate the burden of debt owed by developing countries; and if he will make a statement.
§ Mr. NelsonThe United Kingdom has an excellent record of helping those developing countries with debt problems. It was a direct result of my right hon. Friend the Prime Minister's initiative for the poorest and most indebted countries following International Monetary Fund sponsored programmes of reform, that the Paris Club of major creditor Governments began implementing the Trinidad terms in December 1992. These provide for the equivalent of the cancellation of up to 50 per cent. of eligible bilateral official debt and a commitment on the part of creditors to examine the whole stock of such debt after a period of proven economic and financial responsibility. So far, 15 of the very poorest and most indebted countries have benefited, resulting in the equivalent debt cancellation of almost $1¾ billion. More will follow.
The Government are, however, aware that for some of the most desperate cases the terms as currently applied will not be enough. For this reason, we are pursuing with our creditor country colleagues improvements in the terms. Specifically, we would like to see the degree of concessionality increased for those countries that need it and quicker action on the stock of debt for those countries that already have a proven track record of reform.
The rationale for the policy is threefold: first, to protect as best we can the interests of taxpayers because their money is at risk when countries cannot repay their debts; secondly, to reduce debt to realistically manageable levels and thereby increase the recoveries received; thirdly, to promote development—for which simply writing off debt is not sufficient. Countries must practise sound social and economic policies to benefit from debt reduction as a catalyst for development.