Debt Refinancing

Oral Answers to Questions — Overseas Development – in the House of Commons at 12:00 am on 14th March 1988.

Alert me about debates like this

Photo of Miss Joan Lestor Miss Joan Lestor , Eccles 12:00 am, 14th March 1988

To ask the Secretary of State for Foreign and Commonwealth Affairs if Her Majesty's Government have considered proposals to use additional aid funds to refinance outstanding debts owed to the International Bank for Reconstruction and Development by low-income developing countries; and if he will make a statement.

Photo of Mr Chris Patten Mr Chris Patten , Bath

What counts is that the bank should be making more money available for those countries than they are due to repay to it. We believe that we can more effectively support low-income countries following adjustment programmes by using our aid to finance the imports they desperately need now.

Photo of Miss Joan Lestor Miss Joan Lestor , Eccles

I thank the Minister for that reply. Would he care to comment on the recent proposal of Nordic countries to create a facility to ease the debts owed to the IBRD by many low-income African countries? Will the Government support that proposal at the meeting of the bank in Washington in the spring?

Photo of Mr Chris Patten Mr Chris Patten , Bath

It is one of several interesting proposals that have been made about indebtedness. Of course, there is nothing to stop individual donors from taking that action without setting up a special fund to do so. What is important is that any new initiative should represent additionality in flows of aid to African countries. We have taken a number of steps ourselves—the contribution to the enhanced structural adjustment facility, the major contribution to the World Bank's special programme and the Chancellor's own debt initiative.

Photo of Mr Bowen Wells Mr Bowen Wells , Hertford and Stortford

Would it not be better if these long-dated loans from the IBRD to the poorest countries—because they must have pre-dated the International Development Association—were to be re-financed by the World Bank through the IDA itself and, by so doing, have the right kind of conditionality attached to their renewal, so that we do not have a repetition of the poor economic policies in some of the countries concerned?

Photo of Mr Chris Patten Mr Chris Patten , Bath

What I am anxious to do, as I tried to explain just now, is to ensure that any new initiatives are accompanied by additional funds for countries in Africa. We must also make sure that we protect the credit rating of the World Bank, which is extremely important to the developing countries, as well as to the rest of us.

Photo of Mr Alex Carlile Mr Alex Carlile , Montgomery

Will the Minister tell the House why the Government are not following the policy clearly set out in the Vancouver communiqué of October last year, to which the Prime Minister was a signatory, which advised that we should write off official development assistance debts to all low-income countries and also give renewed priority to reaching the United Nations assistance target?

Photo of Mr Chris Patten Mr Chris Patten , Bath

I am afraid that the hon. and learned Gentleman is a little confused. This country had written off, rather before that statement was made, aid loans to the tune of £280 million for 14 African countries. What the hon. and learned Gentleman could have gone on to do was to read out the endorsement of the Chancellor's debt initiative by not only the Commonwealth Heads of Government but the Commonwealth Finance Ministers.