Mr. William O'BrienTo ask the Chancellor of the Exchequer if he will make a statement about the Government's most recent proposals to reduce third-world debt.
§ Mr. NelsonAs a result of an initiative launched by my right hon. Friend the Prime Minister in 1990, the Paris Club of international creditor Governments now offers concessional rescheduling of the official bilateral debts of the poorest and most indebted countries. Such concessional reschedulings are known as Trinidad terms.
Under present arrangements, 50 per cent. of the eligible debts falling due over the course of an IMF economic adjustment programme are written off. In addition, the creditors undertake to consider writing off 50 per cent. of the whole stock of debt if the debtor maintains a good record with both its debt service and IMF programme. To date, 22 countries have benefited from Trinidad terms. Over the lifetime of these agreements more than $7¼ billion-worth of debt will be restructured and some $2¾ billion-worth of debt forgiven.
While these agreements represent a substantial achievement, the United Kingdom considers that more could be done to help the poorest and most indebted countries. We are thus pressing our fellow Paris Club creditors to improve the existing Trinidad terms. In particular, we hope that they will agree to give debt reduction along the lines of the Prime Minister's original proposal. This would mean: an immediate stock of debt reduction for countries which have edstablished a track record of reform under an IMF adjustment programme; and increasing the level of debt and debt service relief, from 50 per cent. to some two-thirds on average and up to 80 per cent. for the most deserving countries on a case-by-case basis; Last July, the Tokyo summit of G7 Heads of Government backed the United Kingdom's proposals for earlier stock of debt reductions. Despite this, negotiations within the Paris Club are proceeding slowly.