§ Mr. ReedTo ask the Chancellor of the Exchequer what restrictions are placed upon the Government's ability to act independently of other creditors to reduce debt owed by developing countries by (i) the European Union, 237W (ii) the Organisation for Economic Co-operation and Development and (iii) other international organisations or agreements. [61491]
§ Ms HewittThe UK is not restricted in acting unilaterally to reduce debt owed by developing countries by either the EU, the OECD or any other international agreements.
However, lasting solutions to the problems of heavily indebted poor countries require a multilateral effort. Since the UK holds only a part of the total debt owed by these countries, it cannot by itself reduce their debts to sustainable levels. That is why the UK has been making such efforts in international forums to ensure that all creditors co-operate in giving poor countries a permanent solution to their debt burdens.
§ Mr. ReedTo ask the Chancellor of the Exchequer what plans he has to cancel the debt owed to the United Kingdom Government by Nicaragua and Honduras; and if he will make a statement on discussions with other creditors on assistance to Nicaragua and Honduras. [61496]
§ Ms HewittThe UK wrote off all of its loans to Honduras and Nicaragua long before Hurricane Mitch struck. Following the devastation caused to these countries last month, the Chancellor decided that Nicaragua and Honduras need make no debt service payments to ECGD over the next two years. The issue of a moratorium is to be discussed at the Paris Club of official bilateral creditors next week.
The Chancellor wrote to the International Financial Institutions—the IMF, World Bank and Inter-American Development Bank—calling on them to look at possible mechanisms for lessening the debt service obligations of Honduras and Nicaragua, and has taken these proposals forward with his G7 and EU colleagues.
§ Mr. ReedTo ask the Chancellor of the Exchequer if he will urge the IMF to sell gold reserves in order to pay for the immediate suspension of debt service payments to the international institutions by Nicaragua and Honduras. [61494]
§ Ms HewittThe UK Government support, and have been pressing for, the sale of a proportion of the IMF gold reserves to provide financing for the HIPC initiative. The UK will continue to press for gold sales in the IMF Executive Board. Gold sales require the approval of the Executive Board by a majority of 85 per cent., and we are therefore working closely with other members at the IMF to secure Board approval.