HL Deb 28 October 2002 vol 640 cc5-6WA
Lord Hylton

asked Her Majesty's Government:

In respect of debt relief under the heavily indebted poor countries (HIPC) initiative, what are the minimum and maximum times taken to move from the decision point to the competition point; and what is being done to reduce the time required to reach both points more rapidly. [HL5973]

Lord McIntosh of Haringey:

The HIPC initiative was launched in 1996 and substantially enhanced at the G7 Cologne summit in 1999. Under the enhanced initiative six countries—Bolivia, Mozambique, Tanzania, Uganda, Burkina Faso and Mauritania—have moved from decision point to completion point with a minimum time of three months and a maximum time of two years four months. The UK Government have always pressed for the enhanced HIPC initiative to be implemented quickly, but conflict and corruption also impede progress.

To reach decision point a country must prepare an interim poverty reduction strategy paper (PRSP). To reach completion point they then need to develop a full PRSP and make progress in implementing it for at least one year.

In September 2000 the International Monetary Fund (MF) and the World Bank made changes to enable quicker progress: greater flexibility on the length of the track record for performance; and paring down conditionality to those essential for poverty reduction. In particular these changes stressed that interim-PRSPs need only be a plan of action to develop a full PRSP. The UK Government continue to promote these reforms.

These plans, including policy reforms, are drawn up by the country, with the participation of civil society, to show how debt relief and other resources will be targeted on reducing poverty and increasing growth. The country must also be on track with its IMF programme for which there will be a range of conditions, for example on macroeconomic stability or public sector management.

Hence the timing of the completion point is primarily linked to progress in implementing the PRSP. For those countries that had already reached completion point under the original HIPC initiative the time taken to move from decision point to completion point can be quick, eg three months in the case of Uganda.

The UK Government strongly support the PRSP framework introduced by the IMF and the World Bank in 1999. A priority for the HIPC initiative is to ensure that the gains from debt relief are used effectively to reduce poverty, and the time taken to reach completion point reflects that commitment. However, it is important to note that a country receives full interim debt relief on any payments due from decision point, and debt is irrevocably cancelled at completion point.