Debt Relief Programmes (Hansard, 9 July 2003)

§ Hilary Benn

Privatisation is not a pre-condition for countries to start receiving debt relief under the enhanced Heavily Indebted Poor Countries (HIPC) Initiative. In 1999, the UK pressed successfully for debt relief to be frontloaded, so that countries begin receiving relief at the start of the process, when they have developed an Interim Poverty Reduction Strategy—a blueprint for a national strategy to tackle the causes of poverty and developed a satisfactory track record in economic management.

However, in order to receive an irrevocable reduction in their stock of debt, there are three types of conditions that countries have to,meet in order to complete the HIPC process. Firstly, they must demonstrate commitment to poverty reduction by developing and implementing a Poverty Reduction Strategy Paper for one year. This is a nationally owned and led strategy, which analyses the causes of poverty, sets out how these will be tackled and specifies how government resources, including savings from debt relief, will be used. Secondly, countries must demonstrate sound economic management by remaining on-track with an IMF programme. Thirdly, countries must implement a set of reforms, known as Completion Point triggers, which are agreed between the government and the IMF at the start of the HIPC process. These reforms cover a range of measures. Among the 26 countries that have so far qualified for relief, there are a total of 317 Completion Point triggers. Of these, only 41 relate to privatisation and regulatory measures. The Government monitors progress towards meeting these triggers, including taking a view on whether the triggers are still relevant, through both the six-monthly progress reports from the IMF and World Bank, and through discussions at country level. Where overall progress is satisfactory but certain conditions are seen as no longer relevant, or delays have occurred that are beyond a country's control, countries can still complete the HIPC process. For example, Mauritania recently completed the process despite delays in the privatisation of their utility companies.