§ John BarrettTo ask the Secretary of State for International Development what action she is taking to assist countries which have passed their completion point under the HIPC initiative with unsustainable debt. [91161]
§ Clare ShortThe Government has been working to win greater international concern for the problems of debt sustainability facing some Heavily Indebted Poor Countries (HIPCs) as a result of falling commodity prices and I have raised these concerns at the Development Committee of the World Bank repeatedly over recent years. In Ottawa in November 2001, we asked Bank and Fund staff to revisit the debt sustainability analyses of all commodity dependent low-income countries, including HIPCs. The HIPC Initiative now has the flexibility to provide, when appropriate, additional debt relief at Completion Point, so called 'lopping up', to ensure that countries exit the HIPC process with sustainable levels of debt. However, this is not enough and the UK is pressing the World Bank and the IMF to widen their approach to topping up, so that any HIPC country facing unsustainable debts, that has demonstrated its commitment to poverty reduction and economic reform, should qualify for this additional relief. In April 2002, Burkina Faso became the first country to qualify for topping up. Debt relief alone, however, cannot guarantee future sustainability. This requires sound macroeconomic policies, strong growth and export bases, including access to markets of developed countries, access to adequate financing on highly concessional loan and grant terms, and prudent policies on new borrowing. The UK is co-financing a 313W debt strategy project aimed at helping HIPC governments to strengthen their debt management capacity. The UK is also providing substantial aid to Bolivia, Mozambique, Tanzania, and Uganda—countries that have passed their HIPC Completion Point.