§ Mr. BattleTo ask the Chancellor of the Exchequer what estimate he has made of the amount of third world debt which the IMF and World Bank is prepared to cancel; and if he will make a statement. [136061]
§ John HealeyThe UK Government remain fully committed to the rapid and full implementation of the Heavily Indebted Poor Countries (HIPC) Initiative to ensure that it delivers a robust exit from unsustainable debt for the world's poorest countries. At present, 27 countries have reached Decision Point and have started to receive interim relief. Of these countries, eight have reached Completion Point and are now also receiving irrevocable debt relief.
In the September 2003 publication "Heavily Indebted Poor Countries (HIPC) Initiative: Status of Implementation", the staffs of the World Bank and the International Monetary Fund (IMF) provided an update on progress under the Initiative and new estimates of costs. This document is available on both the World Bank and the IMF websites. Table 9 in the document sets out the status of delivery of assistance by the World Bank. Under the original and enhanced HIPC Initiatives, the World Bank has made total debt service reduction commitments of US$12.4 billion and has delivered $2.5 billion.
Table 11 sets out the status of delivery of assistance by the IMF. Under the original and enhanced HIPC Initiatives, the IMF has made total debt service reduction commitments of SDR £1.8 billion (approximately $1.3 billion) and has disbursed SDR £1 billion (approximately $740 million). The Special Drawing Right (SDR) serves as the unit of account of the IMF and is allocated to member countries in proportion to their IMF quotas.
The UK has provided commitments of around £2 billion of debt relief to eligible HIPC countries and has pledged a total of $474 million through the multilateral institutions to further support the initiative. The UK is committed to providing 100 per cent. relief for eligible HIPC countries, and calls for all bilateral, multilateral and commercial creditors to participate in the Initiative.
The HIPC Initiative has an important role to play in maximising the resources available for poverty reduction in developing countries. However, unless there is an increase in the volume of resources available from donors to poor countries, additional debt relief would simply reallocate resources from one form of financing to another, and from non-HIPC poor countries to HIPC countries, without adding to the overall financing available for poverty reduction. Furthermore all HIPC countries would still need additional aid to meet the Millennium Development Goals even if all of their debt from the World Bank and IMF were forgiven. That is why the UK's proposal for an International Finance Facility is so important. It can provide the much-needed substantial increase in 650W resources that debt relief alone would not achieve, which could be disbursed by way of grants and additional debt relief.