Rwanda (Hansard, 26 October 1999)

§ Clare Short

Rwanda's external debt burden is heavy. At the end of 1998, Rwanda's debt stock was around US$1.2 billion, equivalent to 59 per cent. of GDP.

Multilateral creditors account for over 80 per cent. of Rwanda's external debt stock. A Multilateral Debt Trust Fund was established in 1998 to service Rwanda's debts to the International Development Association, the African Development Bank and the International Fund for Agricultural Development over the period 1999–2001, using funds pooled by bilateral donors. The UK contributed £10.6 million to this Fund in 1999, as part of the disbursement of the £30 million of flexible assistance committed in the Development Partnership Understanding signed by the two Governments in April 1999. The Fund is expected to be adequately financed through to the end of 2000. The UK will keep under review whether a further UK contribution to the Multilateral Debt Fund might be appropriate.

We strongly support the agreement at the 1999 Annual Meetings of the IMF and World Bank to revise the framework for debt relief for heavily indebted poor countries (HIPC), and to link it to poverty reduction much more strongly. For Rwanda, the revisions mean additional debt relief, provided that it continues to pursue sound policies, and a start to this relief three years earlier than under the original HIPC framework. Rwanda's Decision Point, when it will start to receive its HIPC debt relief, is likely to be in the next year or so. The UK will press for the maximum reduction in multilateral debt servicing in the early years, consistent with Rwanda being able to spend the savings effectively on programmes to reduce poverty.

In July 1998, agreement was reached between Paris Club official bilateral creditors (Austria, Canada, France, Japan, the Netherlands and the United States) and Rwanda on a debt rescheduling on Naples terms. All the relevant bilateral agreements with Paris Club creditors have now been signed.