§ Mrs. GillanTo ask the Chancellor of the Exchequer (1) what authority will be responsible for assessing the effect of bilateral debt relief on the heavily indebted poor countries; [105737]
(2) who will assess the implementation of health and education programmes carried out following the cancellation of bilateral debt. [105736]
§ Miss Melanie Johnson[holding answer 20 January 2000]: The Government are satisfied that the conditions of debt relief applied under HIPC are sufficient to guarantee that moneys freed up will be spent on social programmes and poverty reduction. The revised HIPC framework not only provides faster, wider and deeper debt relief, it also increases the impact which this relief has on poverty, through the development and implementation of national Poverty Reduction Strategies, the implementation of which will be an essential pre-condition of qualification for HIPC debt relief.
The transformation of the IMF' s Enhanced Structural Adjustment Facility into the Poverty Reduction and Growth Facility means that the Poverty Reduction Strategy will become the key instrument in the country's relations with the donor community. In the context of lending operations and assistance strategies, the Boards of the IMF and World bank will be asked to endorse the Poverty Reduction Strategy Paper. The Strategy will therefore provide the basis for IMF and World bank concessional lending to HIPC countries in the future, as well as for debt relief now.
§ Mr. StreeterTo ask the Chancellor of the Exchequer what assessment he has made of the amount that each of the heavily indebted poor countries will save in debt service as a result of the decision to cancel bilateral debt. [105825]
§ Miss Melanie Johnson[holding answer 20 January 2000]: The specific amount of extra debt relief that a country will receive in any one year cannot be known until the amounts and way in which their multilateral HIPC debt relief will be given is known—in particular, the effect of any debt rescheduling of official bilateral creditors agreed by the Paris Club. This is why the Government is working with the International Financial Institutions to ensure that countries come forward for multilateral relief as soon as is possible.
§ Mr. StreeterTo ask the Chancellor of the Exchequer which departmental budget will cover the cost of the cancellation of ECGD debt to the heavily indebted poor countries. [105829]
§ Miss Melanie Johnson[holding answer 20 January 2000]: The Department for International Development will make grant payments to the countries in question to meet the remaining debt service obligations to ECGD after multilateral HIPC debt relief. These grant payments will be made from resources which are additional to the current aid budget.
§ Mr. StreeterTo ask the Chancellor of the Exchequer when he estimates that each of the heavily indebted poor countries will benefit from the bilateral debt relief programme. [105747]
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§ Miss Melanie Johnson[holding answer 20 January 2000]: The UK's extra bilateral debt relief is dependent on countries first qualifying for multilateral debt relief under the HIPC initiative.
The G7 remains committed to its target of working with the International Financial Institutions to ensure that three-quarters of eligible countries reach their decision point by the end of the year and the remainder embark on the process as soon as possible thereafter.
§ Mr. Matthew TaylorTo ask the Chancellor of the Exchequer what estimate he has made of the cost of the reduction of debt owed by heavily indebted poor countries to the UK over each of the next 25 years; what is the value of the debt written off at current prices; and what part of the debt was counted as an asset by the Treasury for accounting purposes. [105837]
§ Miss Melanie JohnsonThe costs of reduction of debt by the heavily indebted poor countries will be divided between those amounts due to the relief provided under traditional multilateral debt mechanisms i.e. due to the UK's participation in the HIPC initiative and those amounts due to the extra bilateral relief that the UK is providing in order to relieve 100 per cent. of the debt burden of these countries. The current value of the total amount of debt owed to ECGD by the heavily indebted poor countries is approximately £1.9 billion.
The cost of the debt reduction in any one year will depend on the number of countries who are eligible for relief, the amount of debt relief required to bring their debt stock to a sustainable level as defined by the terms of the enhanced HIPC initiative and the terms of their Paris Club debt rescheduling agreement.
All debt held by ECGD is recorded in their own Accounts, which are managed on a commercial basis and separate from the Government's own accounts. The costs of debt cancellation due to the UK's participation in the multilateral HIPC initiative will fall to ECGD and will be recorded in their Accounts as an amount deducted from Recoverable Claims.
The costs of providing the extra bilateral relief over and above the amounts due to the UK's participation in the HIPC initiative will be met by the Department for International Development from resources additional to the existing aid budget. The Government estimate, though, that, subject to assumptions about the period over which countries become eligible for relief and the amount of relief they receive under the multilateral HIPC initiative, the costs of providing the extra bilateral relief will be £640 million over the 25 year period.