Heavily Indebted Poor Countries

HC Deb 01 May 2002 vol 384 cc852-4W

Mrs. Spelman

To ask the Secretary of State for International Development what proportion of the debts owed by heavily indebted poor countries constitutes debts owed to the IDA. [53625]

Clare Short

The share of the estimated costs attributed to the World bank group (including IDA) for the HIPC initiative is US$8.1 billion in 2001 net present value terms, out of the total costs of US$36.4 billion.

Mrs. Spelman

To ask the Secretary of State for International Development (1) what action her Department is taking to ensure that the costs of the structural adjustment programmes of the HIPC Initiative are not borne disproportionately by the poor; [53616]

(2) what evidence her Department has collated on the impact that the structural adjustment programmes of the HIPC initiative has had on economic growth rates of each of the HIPC countries; [53618]

(3) what contribution the structural adjustment programmes of the HIPC Initiative has made to the good of poverty reduction. [53620]

Clare Short

The enhanced heavily indebted poor countries (HIPC) initiative, which was agreed in September 1999, provides deeper debt relief to poor countries committed to eradicating poverty. Up to $100 billion debt could be written off for the 42 HIPC countries, reducing their debts by more than two thirds. On average, the 26 countries that have already qualified for HIPC relief will spend three times more on the social sectors in 2002–05 than on debt service over the same period.

fAn important feature of the HIPC initiative is the recognition of the link between debt relief and poverty reduction in order to ensure the poor benefit from debt relief. Governments are developing national poverty reduction strategies, involving civil society and international donors, specifying how resources, including savings from debt relief, will be spent. As part of the Poverty Reduction Strategy Paper (PRSP) approach, the World bank and IMF have committed to undertaking poverty and social impact analysis (PSIA) of major macroeconomic and structural reforms likely to have significant impact on the poor. The World bank and IMF are leading a programme of work on PSIA and are realigning their programmes with PRSPs in these countries. We are supporting this work by piloting PSIA studies in six countries. We are also working with partner countries on their PRSPs, through our bilateral programmes.

Mrs. Spelman

To ask the Secretary of State for International Development (1) what assessment she has made of the impact of falling commodity prices on debt sustainability; and whether she has changed her assessment of debt sustainability levels of heavily indebted poor countries accordingly; [53657]

(2) how levels of debt sustainability calculated by the HIPC Initiative were changed by the events of 11 September. [53587]

Clare Short

We have been following closely the impact of falling commodity prices on developing countries since well before the events of 11 September. At the annual meetings of the World bank and IMF in Ottawa last November, we raised this concern and asked bank and fund staff to revisit the debt sustainability analyses of all commodity dependent low-income countries, including HIPCs. The IMF and World bank analysis, published last month, shows that, although the situation varies from country to country, the external debt indicators for most HIPC countries have deteriorated, and several HIPC countries now face unsustainable debt burdens. Following UK pressure, the World bank and IMF boards have agreed to provide additional relief to countries in this situation. This was reconfirmed at the spring meetings last month.

Mrs. Spelman

To ask the Secretary of State for International Development (1) what recent discussions she has had with World bank officials regarding the structural adjustment programmes of the HIPC initiative; [53617]

(2) what recent discussions she has had with the heavily indebted poor country Governments regarding the structural adjustment programmes of the HIPC initiative. [53619]

Clare Short

At last month's spring meetings of the IMF and World bank apart form my attendance at the Development Committee which is also attended by many World bank officials, I also met James Wolfensohn, president of the World bank, to discuss among other things progress on the enhanced heavily indebted poor countries (HIPC) initiative and the implementation of the Poverty Reduction Strategy Papers (PRSP) process. The international community remains committed to vigorous implementation and full financing of the initiative. It has been recognised that support is needed to integrate poverty and social impact analysis (PSIA) into national poverty reduction strategies. The bank and fund are leading a programme of work on PSIA and are aligning their programmes with PRSPs in the poorest countries. My Department is supporting this work by piloting PSIA studies in six countries.

I regularly meet Ministers from HIPC countries to discuss key issues affecting their development, including debt relief.