Debt Relief

Oral Answers to Questions — Treasury – in the House of Commons at 12:00 am on 16th December 1999.

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Photo of Andy Reed Andy Reed Labour/Co-operative, Loughborough 12:00 am, 16th December 1999

What discussions he has had since the Cologne summit with the IMF on debt relief for the world's poorest countries. [101769]

Photo of Miss Melanie Johnson Miss Melanie Johnson Economic Secretary, HM Treasury

My right hon. Friends the Chancellor and the Secretary of State for International Development wrote to the managing director of the International Monetary Fund and the president of the World Bank on 1 December to press for countries to be brought forward quickly under the new debt relief initiative agreed at this year's annual meetings. In addition, my right hon. Friend the Chancellor met the managing director of the IMF and the president of the World Bank on 7 December.

Photo of Andy Reed Andy Reed Labour/Co-operative, Loughborough

I thank my hon. Friend for that reply. While it is appreciated that there is a need to speed up the process, and especially the heavily indebted poor countries initiative, will she also ensure that, in future discussions, the measures are more closely linked to poverty reduction in the countries that receive the benefit? We can thus ensure that all moneys are well spent and attack the real problems of world poverty.

Photo of Miss Melanie Johnson Miss Melanie Johnson Economic Secretary, HM Treasury

I thank my hon. Friend for his continued pressure on us to take more account of poverty. The Government are pursuing that at every opportunity. With the World Bank and the IMF, we have made sure that they have formed new joint working partnerships to flesh out the new poverty reduction strategies and to ensure that their focus is alleviating poverty in the affected countries.

Photo of Sir Sydney Chapman Sir Sydney Chapman Conservative, Chipping Barnet

The Minister will recall the Chancellor proudly proclaiming at the Labour party conference that he would cancel third-world debt. Can she confirm whether that means 100 per cent. guaranteed cancellation or cancellation of only the debt accrued before the Paris Club decided to reschedule the debt of a particular country? If it means the latter, as many of us suspect, will she also confirm that, in some cases, only 40 per cent. of debt—and, for Uganda, only debt accrued up to 1981—would be cancelled?

Photo of Miss Melanie Johnson Miss Melanie Johnson Economic Secretary, HM Treasury

The Chancellor said on 30 September that the UK is prepared, on a case-by-case basis, to go further than 90 per cent.—and possibly up to 100 per cent., if necessary—when debt relief would finance poverty relief—[Interruption.] For each individual country. The point of the figures that the hon. Gentleman mentioned is that we are writing off two thirds of the debt of the poorest countries under the definitions of the HIPC initiative. The Government are committed to that and a great deal of progress is being made in achieving those goals.

Photo of Mr Roy Beggs Mr Roy Beggs UUP, East Antrim

Since the Cologne summit, what conditions have been imposed and what monitoring has been done to ensure that those countries that benefit from debt relief are applying more resources to education and health care?

Photo of Miss Melanie Johnson Miss Melanie Johnson Economic Secretary, HM Treasury

We have, as I said, made sure that there is a focus on poverty and that we address health issues. We expect a number of countries to be able to benefit shortly from the enhanced HIPC 2 programme and hope that Uganda, Mozambique, Bolivia and Mauritania will all be ready to do so soon. On 8 December, Honduras met the IMF board to open discussions on the process. There is much greater focus throughout on the programmes that the hon. Gentleman and I both want in place.

Photo of Mr Nigel Beard Mr Nigel Beard Labour, Bexleyheath and Crayford

Does my hon. Friend consider the powers and policy of the IMF adequate to help countries in financial crisis? Will she comment in particular on the recent statement by Mr. Larry Summers, the United States Treasury Secretary, that the IMF should confine itself to short-term loans and leave long-term loans to the private sector?

Photo of Miss Melanie Johnson Miss Melanie Johnson Economic Secretary, HM Treasury

We have continued to press for greater transparency in matters with which the IMF deals. We support in particular Larry Summers's comments in relation to considering the establishment of a fundamentally new framework for the international community's efforts to combat poverty that will give the World Bank the lead and the IMF a more tightly focused role. We also believe, as he does, that, although macro-economic stability is necessary, it may be far from sufficient to create lasting and inclusive growth. There is a commitment to transparency, and we believe that there is no reason why the IMF's operational budget, for example, should not be published regularly. He and the UK Government share views on those moves and are looking to what would be the right future for the IMF.