HC Deb 12 July 1993 vol 228 cc367-8W
Mr. Milligan

To ask the Chancellor of the Exchequer what action his Department is taking to relieve the debt of the poorest third-world countries.

Mr. Nelson

The United Kingdom is leading the way in promoting international agreement on debt relief for those poorest third-world countries which owe most of their debts to Governments. It was a direct result of my right hon. Friend the Prime Minister's initiative for the poorest and most indebted countries following the International Monetary Fund sponsored programmes of reform, that the Paris Club of major creditor countries began implementing a modified version of the Trinidad terms in December 1991. This had the effect of halving the payments due to creditors and gave a commitment to consider restructuring the whole stock of a country's eligible debt after a good track record of economic reform had been established. Seventeen countries have so far benefited from these terms, resulting in the debt cancellation of almost$1¾ billion during the lifetime of the agreements. Moreover, this Government have relieved developing countries of the burden of over £1,000 million of old aid loans, and all new aid to the poorest countries has been on grant terms for many years.

The United Kingdom Government are, however, aware that, for some of the most desperate cases, Trinidad terms as currently applied are not generous enough. We are therefore taking every opportunity to pursue improve-ments to the terms with our creditor country colleagues.

Specifically, we would like to see the degree of concessionality increased to a range of 50 per cent. to 80 per cent. on a case-by-case basis for those countries that need it. We would also like to see quicker action on the stock of debt for those countries that already have a proven track record of reform with the IMF. Ministers continue to press these points on discussions with other creditor countries, most recently at the Tokyo summit.

Ms Eagle

To ask the Chancellor of the Exchequer if he will make a statement on national debt in Africa.

Mr. Nelson

The United Kingdom Government are leading the way in promoting international agreement on debt relief for the poorest and most severely indebted countries many of which are in sub-Saharan Africa. It was a direct result of my right hon. and learned Friend the Prime Minister's initiative for the poorest and most indebted countries following IMF-sponsored programmes of reform, that the Paris Club of major creditor governments began implementing the Trinidad terms in December 1991.

Seventeen countries have so far benefited from Trinidad terms, including 13 of the poorest countries in sub-Saharan Africa. Under these agreements, over $3 billion of sub-Saharan African debt has been rescheduled by the Paris Club, cancelling over $1 billion during the lifetime of these agreements.

Moreover, the Government have also cancelled nearly £200 million of old aid debts owed by sub-Saharan African countries which are successfully pursuing sound policies of reform. New aid to such countries is now provided only in the form of grants.

However, the Government are aware that, for some of the most desperate cases, the terms as currently applied will not be enough. We are therefore taking every opportunity to pursue improvements to the terms with our creditor country colleagues.