HC Deb 16 February 1993 vol 219 cc119-20W
Mr. Burns

To ask the Chancellor of the Exchequer what progress Her Majesty's Government have made in tackling the problem of developing countries' external debt during 1992.

Mr. Nelson

The Government have made substantial progress in dealing with developing country debt issues during 1992.

The Government are directly responsible for official bilateral debts. Proposals for rescheduling or restructuring such debts are dealt with multilaterally through the Paris club of creditor countries.

The Paris club reached agreements with 18 countries during 1992, involving the rescheduling or restructuring of over US$10½ billion of bilateral official debt. Three agreements were with middle-income countries— Argentina, Brazil and Bulgaria—and a further four were with lower middle-income countries—Cameroon, Ecuador, Jordan, and Morocco—which benefited from more generous rescheduling arrangments involving longer grace and repayment periods, known as "Houston" terms.

I am delighted to announce, however, that the majority of agreements, 11 in all, were concluded on Trinidad terms. The countries concerned were Bolivia, Ethiopia, Equatorial Guinea, Guinea Republic, Honduras, Mali, Sierra Leone, Tanzania, Togo, Uganda, and Zambia. This follows from the Paris club's decision in December 1991 to begin implementing the initiative of my right hon. Friend the Prime Minister for providing concessional relief to the very poorest indebted countries.

In addition to the countries listed, Nicaragua and Benin benefited from Trinidad terms in 1991, and Mauritania in 1993, making 14 beneficiaries in all so far.

Trinidad terms provide for the equivalent of cancellation of up to half the eligible debt consolidated by the agreements. Each agreement contains an undertaking by creditors to consider the case for a reduction in the whole stock of the debtor countries' eligible debt to the Paris club after a period of proven economic and financial responsibility. During 1992 Trinidad terms agreements covered over US$3 billion of debt entailing the forgiving of over US$1 billion over the life of the agreements. Including Nicaragua, Benin, and Mauritania, over US$4 billion of debt has been restructured under Trinidad terms, and about US$1½ billion forgiven over the life of the agreements.