HC Deb 10 June 1993 vol 226 cc291-2W
Mr. Burns

To ask the Chancellor of the Exchequer if he will make a statement on his policy on the United States proposal to join the international consensus on debt reduction on Trinidad terms.

Mr. Nelson

The Government very much welcome the announcement by the United States Administration that it is seeking congressional approval for measures to enable the United States to join the Paris Club consensus for the implementation of debt reduction on Trinidad terms for the poorest and most indebted countries.

Debt reduction on Trinidad terms was originally proposed by the Prime Minister in 1990.

A modified version of the Prime Minister's Trinidad terms proposals, implemented by the Paris Club from December 1991, provide for 50 per cent. reduction in the debt payments due over a period of between one and three years. They also provide for consideration of the question of the country's whole stock of debt after three to four years, subject to satisfactory performance under IMF programmes.

Approval of the legislation and necessary appropriation measures by Congress should allow the United States to give the 50 per cent. debt or debt service reduction under the Trinidad terms as presently implemented. The United States proposal should also allow the United States to participate in a Paris Club stock of debt reduction.

If the United States is able to implement Trinidad terms this is good news. It implies full international consensus at the Paris Club in favour of debt reduction. Moreover this should also facilitate in due course progress on other key objectives of the United Kingdom's strategy for official debt.

The Government would like the present Trinidad terms improved so that they conform more closely to the proposals that my right hon. Friend the Member for Huntingdon (Mr. Major) actually put forward in Trinidad in 1990. In particular, we would like to see:

  • — an increase in the rate of relief in excess of 50 per cent. on a case-by-case basis. For some countries, relief of up to 80 per cent. might be justified;
  • — where a debtor has a good track record of performance under IMF programmes, immediate stock of debt relief should be given. There should be no need to have to wait three to four years.