Agreement on a substantial revision to the heavily indebted poor countries initiative was reached at the annual meetings of the World bank and the IMF at the end of September. The new framework will deliver deeper debt relief and provide it more quickly and to more countries. The debt relief will be strongly focused on supporting poverty reduction strategies. A comprehensive financial package is still being worked out.
I made an additional pledge in Washington of $50 million towards the costs, helping to leverage further pledges from other countries and bringing the UK's total commitment to $221 million, or approximately £135 million. We are pressing the European Commission to firm up its proposals to a contribution of at least 1 billion euro. If that is agreed, the UK contribution to the trust fund will rise to $400 million.
I welcome what my right hon. Friend has said and congratulate her on her work in achieving that historic agreement, which shows that the Government are leading the world. Does she agree that, alongside the debt reduction initiative, in the new World Trade Organisation round starting in Seattle this month, it will be important for the agenda to include international development targets so that poorer countries benefit from world trade agreements? Will she ensure that the Government's negotiating position includes that commitment?
At the World bank annual meeting, we made a commitment to supporting developing countries in advancing their trading rights and therefore their economic position in the next trade round. The Government have made a strong commitment to work for a trade round that brings real benefits to developing countries. It is both morally right and will give us a more stable global economy if the poorest countries can speed up their economic growth and the reduction of poverty.
Is my right hon. Friend aware that the agreement that she and others have brokered is something of which Labour Members can be incredibly proud? It differentiates us from the Conservative party, which was unable to broker such agreements in government. It demonstrates how, if Britain is once again respected in the world, it can make a real difference in working for both humanitarian and economic objectives, whether in the European Community or on the wider international stage.
I am grateful to my hon. Friend. To be fair to the Conservatives, some of their representatives called for debt relief and gave a lead on some of the arguments, but they never put any money on the table and, therefore, had much less leverage with other countries than we have had since we came into government. We have worked since for faster debt relief and made available a bigger financial contribution. I am most proud that we have got debt relief linked to systematic poverty reduction strategies and got the IMF and the World bank to work in a way that is unprecedented and will have consequences beyond debt relief.
I congratulate my right hon. Friends the Secretary of State and the Chancellor and the Jubilee 2000 campaign on their excellent work over the past few years and especially this summer. Will the money come from the Department for International Development budget or from the Treasury, and what are the annual recurrent costs? I am delighted that the agreements have been reached, but how will we pay for them?
I am glad that my hon. Friend has raised that point, because the funding package that we need to implement Cologne is not firmly in place. We must firm up the EU pledge, and the pledge made by the United States of America has not yet been supported by Congress. The US Administration are working hard to get that support, but, if they fail, the HIPC trust fund will be in difficulty. The funding comes partly from the IMF, partly from the World bank and partly from export credit departments, but we need a trust fund to make up the difference that cannot come from those pockets. Our contributions to that trust fund come mostly from my Department's budget, although the Treasury and my Department will share the cost of the additional commitments made in Washington. Debt relief must help the poor, because otherwise it would mean that aid money was taken away from equally poor countries without large debts—and that would not be fair.
The Secretary of State will know that the Opposition support much of the progress made in the past 12 months on debt relief, building on the success of the Conservative years. Given that US Treasury officials have now confirmed that President Clinton's initiative of 100 per cent. bilateral debt write-off for the world's poorest countries will include debts that arose after the cut-off date in each case, will the Secretary of State clarify whether the Government's write-off will also include post-cut-off-date debt—yes or no?
Let me explain to the hon. Gentleman that President Clinton—who is the master of spin—has not yet been able to persuade Congress fully to fund the USA's commitment. He said that his Government will consider going beyond the 90 per cent. debt write-off—at least for all export credit debt, which is part of the new package—to 100 per cent., case by case, if the countries involved are focused on poverty reduction. We hope that he will get the funding from Congress to deliver that pledge. Going beyond 90 per cent. is not a matter for my Department, and I wish to make it clear that it would be wrong to use our aid budget to pay off export credit debt. That is a matter for my right hon. Friends the Chancellor and the Secretary of State for Trade and Industry. The Chancellor has made it clear that, in individual cases, we will consider going as far as 100 per cent. The hon. Gentleman should put his questions to my right hon. Friend, because I am keen to protect my budget from that argument.
I am sorry, but that simply will not do. The Secretary of State is keen to take the credit for some of the breakthroughs, but she is not prepared to take the responsibility. If the US Government matches the 100 per cent. write-off that President Clinton has spoken about, will the Government match it—yes or no? The Secretary of State has already answered that question because she has written to every Labour Member, saying that the Government will match President Clinton's offer. She even included a model press release for Members to send to her constituents setting out the good news even further. Labour's internal document claims that Labour leads on debt relief and that the Government have agreed to a write-off of 100 per cent. of UK loans. Will the Secretary of State confirm that the Government will match President Clinton's offer? If they will not, is not that another case of Labour saying one thing and doing another?
I am afraid that the hon. Gentleman shows that his grasp of the issues is about the same as that of Miss Ann Pettifor. Given her political background, one might say that the two make strange bed fellows.
The question is interesting, but it is not the most important. The most important achievement made at Cologne, and then in Washington, is that debt relief is now faster and deeper, and is focused on a leveraging policy that systematically reduces poverty. The issue raised by the hon. Gentleman is something of a side show, given that the funding and agreement to implement what was agreed at Cologne have not yet been secured. President Clinton has not yet got the funding to meet his contribution to the HIPC trust fund. We hope that he will get that additional money.
As I said earlier, the hon. Gentleman should take the matter up with my right hon. Friends the Chancellor of the Exchequer and the Secretary of State for Trade and Industry. However, I am afraid that the hon. Gentleman does not understand that the most important consideration for the poor is to implement the package that we have got.
I welcome the initiatives that the Government have taken, which follow on from those taken by the previous Conservative Government. However, does the Secretary of State agree that one of the problems is that the programme has moved too slowly? So far, only four of the 36 qualifying countries have received debt reductions. That is the result of what many people consider to be unrealistically stringent economic conditions imposed by the International Monetary Fund and the World bank. Is the right hon. Lady satisfied that those rigid conditions are being relaxed in the latest initiatives?
The hon. Gentleman is absolutely right. The previous initiative required a six-year track record, but that is an awful long time for qualifying countries. The initiative has gone much too slowly because it is not generous enough. It was meant to give a sustainable exit from the burden of debt but, when coffee prices worldwide fell, Uganda and Bolivia—which had qualified for debt reduction—found that they had not escaped that burden. Our aim is to achieve conditions that will be more generous and flexible, so that countries can qualify for relief earlier. By that means, we will be able to leverage good economic policy to promote the growth that reduces poverty.
That is what has been agreed in the new package, and what is so good about it. We must now assemble the funding to get it implemented very rapidly.