§ Mr. Ieuan Wyn JonesTo ask the Secretary of State for Foreign and Commonwealth Affairs what steps are currently undertaken by the Overseas Development Administration to reduce debt burdens of countries in sub-Saharan Africa.
§ Mr. NelsonI have been asked to reply.
It is Government policy to cancel the debts of those very poor and indebted countries which are successfully pursuing sound policies of reform. So far, nearly £200 million of old aid debt has been cancelled in countries in sub-Saharan Africa, and other countries will benefit as they fulfil the qualifications for this treatment. All new aid to very poor countries is now given only in the form of grant aid.
Those debt-distressed countries which do not qualify for aid debt cancellation may apply to have their debts rescheduled through the Paris Club, composed of the major creditor Governments. The Paris Club is prepared to reschedule aid debt over long periods at highly concessional rates of interest. The effect of this is to increase greatly the grant element of the loans concerned, so producing a very substantial reduction in the present value of the obligation to repay.
Many of these countries owe most of their official debt to export credit agencies rather than to aid agencies. That is why the United Kingdom proposed the comprehensive Trinidad terms initiative for reducing the debts of the very poorest and severely indebted countries. So far, over $3 billion has been consolidated under these agreements in sub-Saharan Africa by the Paris Club, cancelling over $1 billion during the lifetime of the agreements.