HC Deb 19 July 1999 vol 335 cc446-7W
Mr. Reed

To ask the Chancellor of the Exchequer if he will make a statement on(a) progress made on the second phase of the highly indebted poor countries review, with specific reference to enhanced structural adjustment facility and (b) how the Government intend to link debt relief and poverty eradication. [90508]

Ms Hewitt

The Köln Summit made clear that the link between debt relief and poverty reduction should be strengthened.

The UK has put forward its own proposals for strengthening that link. Among other things, the UK has suggested that:

  1. i. Debt relief should be structured both to provide resources for anti-poverty programmes, and to revive business confidence. This requires a balance between debt stock reduction and debt service reduction in the early years. To achieve this:
The World Bank and IMF should put forward a menu of options for achieving the required net present value reduction in their debt, taking into account the overall time profile of a country's debt service and creditor procedures; This menu should include an option which reduces multilateral debt service by 50–75 per cent. in early years, and another with as much stock reduction as possible; The indebted country should then be able to negotiate around these options.
  1. ii. Debt relief should provide an opportunity to invigorate the entire government anti-poverty programme. It should not be seen as funding a separate, add-on operation. This anti-poverty programme should be informed by the World Bank and UN's work on social principles, and by the thinking around the Comprehensive Development Framework. It should incorporate a medium-term expenditure framework for the whole budget. Macro policy—and hence ESAF—should be an integral part. It should be as widely owned as possible. Hence, the anti-poverty plan needs to be built on existing processes in-country, rather than on an international blueprint. Although final agreement on IFI support for the programmes should continue to rest with countries and Bank/Fund Boards, other main players should have the opportunity to feed their comments in directly on final drafts before they go to the Boards.

The UK's proposals are included in a paper which has been sent to the World Bank and the International Monetary Fund as part of phase II of the HIPC review. Copies are available in the Libraries of both Houses and on the Treasury's website (www.hm-treasury.gov.uk/docs/1999/hipc2.html).

Back to