§ The Earl of Sandwichasked Her Majesty's Government:
What evidence they have that debt relief through the heavily indebted poor countries initiative is linked to poverty reduction in countries like Tanzania, where health and education spending is declining in real terms because of debt servicing and falling aid. [HL3570]
§ Baroness AmosThe Government welcome the comprehensive review of the heavily indebted poor countries (HIPC) initiative which is currently under way and the G7 call at the Cologne Summit for faster, deeper and wider debt relief under HIPC. We strongly support the statement that the objective is to increase spending on anti-poverty programmes such as health and education. If the revisions proposed by the G7 are adopted at the annual meetings of the World Bank and IMF in September, HIPC will deliver twice as much debt relief, twice as quickly. The link to poverty reduction is being examined in the second phase of the HIPC review and proposals for strengthening it will also be considered in the autumn. We are working very closely with the Government of Tanzania on ways in which HIPC debt relief can be used to tackle poverty.
§ The Earl of Sandwichasked Her Majesty's Government:
Whether they have statistics to show that heavily indebted poor countries debt relief has already demonstrated a direct or indirect link with poverty eradication in Uganda, Mozambique or any other country now benefiting from the initiative. [HL3571]
§ Baroness AmosThe purpose of providing debt relief is to free resources for investment in programmes to eliminate poverty and assist countries to achieve the international development targets. Only four countries have so far received HIPC debt relief—Uganda and Bolivia in 1998, and Mozambique and Guyana recently. In the case of Uganda, its Minister of Finance wrote in June outlining his country's experience of HIPC to inform our thinking on the necessary revisions to the HIPC initiative. The Minister noted that Uganda had established a poverty action fund into which debt service86WA savings are placed. In the first year of operation, the PAF had more than doubled the amount spent on priority poverty reduction programmes, including primary education, primary healthcare, rural roads arid safe water. The operation of the PAF has been discussed with donors and civil society to ensure transparency and accountability. Mozambique will use the savings on its debt service payments to tackle poverty. The Government plan to increase annual current spending on health and education from 120 million dollars in 1998 to 175 million dollars in 2001, or from marginally over the amount paid on debt service in 1998 to more than double the projected debt service payments after HIPC relief.