§ Baroness Gould of Potternewtonasked Her Majesty's Government:
When the Export Credits Guarantee Department expects to complete its review of its debt conversion scheme. [HL1159]
§ The Minister of State, Department of Trade and Industry (Lord Clinton-Davis)The review is now complete. The Government have concluded that the scheme as operated between 1992 and 1997 did provide significant benefits both to the debtor country and to the UK taxpayer and that these benefits could be further enhanced by some small improvements. A revised scheme is therefore being relaunched and ECGD is, from today, able to consider offers to purchase rescheduled debts owed by up to 32 countries.
Under the revised scheme, ECGD will, as before, be able to receive an immediate cash benefit for debts rescheduled through the Paris Club arrangements. The purchaser of the debt will be repaid by the debtor country in local currency subject to the funds being invested in a suitable project in that country. As a result, the debtor country benefits both from being able to convert a hard currency obligation into a local currency debt and also from securing additional investment.
During the period when the earlier scheme operated, ECGD sold some US$133 million of debts to a number of organisations investing in a range of projects, including in the fields of education, agricultural rehabilitation and healthcare.
The improvements to the scheme involve certain administrative changes, notably the requirement that the 240WA potential purchaser should pay a commitment fee to secure the purchase price and exclusive negotiating rights for specific debt for a given period.