Debt Relief

Oral Answers to Questions — Treasury – in the House of Commons at 10:30 am on 26th January 2006.

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Photo of Celia Barlow Celia Barlow Labour, Hove 10:30 am, 26th January 2006

If he will make a statement on proposals for debt relief to be discussed under Russia's presidency of the G8.

Photo of Chris Bryant Chris Bryant PPS (Rt Hon Lord Falconer of Thoroton, Secretary of State), Department for Constitutional Affairs

What assessment he has made of the likely impact of Russia's presidency of the G8 for cancellation of debt in the world's poorest countries.

Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer

Since our last Question Time, 100 per cent. multilateral debt relief has been finally achieved for the first 19 heavily indebted poor countries, of 40 countries that are now eligible to share in the £170 billion write-off in debt. In Britain's view, however, all 67 of the poorest countries of the world should have debt reduction. By paying our share of their debt service, we will unilaterally lead debt collection for those non-HIPCs, and when I am at the G8 in Moscow I will urge other countries to follow us.

Photo of Celia Barlow Celia Barlow Labour, Hove

I am proud of the many achievements in international development secured under our stewardship of the G8 last year. However, those should be seen as merely one important step along a long road. Can my right hon. Friend outline what he is doing to keep those issues at the top of the agenda during the Russian presidency, and what are the prospects of future successes for the world's poor this year?

Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer

I am grateful to my hon. Friend. She has done a huge amount in her constituency to make people more aware of these important issues. Indeed, around the country hundreds of thousands of people are campaigning for greater debt relief. I will meet other Finance Ministers at Davos tomorrow when we shall undertake a session on this very set of issues. When the G8 meets in Moscow on 14 February I will propose that we go further on debt relief. We will pay 10 per cent. of the share of the debt interest payments of the non-HIPC countries—that is more than 30 countries who are not in the first list for debt relief, but who in our view should receive debt relief. Other countries, including Canada, have already announced that they will do likewise. We are trying to persuade yet other countries that this is the right step forward. Although we have had an enormous advance in the past few months, with multilateral and bilateral debt relief agreed at 100 per cent. for some of the poorest countries in the world, there is still a great deal more to do. Our aim is that nearly 70 countries will receive the debt relief that is necessary for them to begin their economic reconstruction.

Photo of Chris Bryant Chris Bryant PPS (Rt Hon Lord Falconer of Thoroton, Secretary of State), Department for Constitutional Affairs

Largely thanks to this Government's determination to get a better deal for the poorest countries in the world, we have seen an amazing turnaround in the last 10 years in international public opinion on debt relief. Does my right hon. Friend the Chancellor worry a little, with changes of Government in some G8 countries, particularly with Conservatives coming to power in Canada, that sometimes Conservatives are a little Johnny-come-lately on these issues? They say a lot of things, but then never put them into practice. Earlier, my right hon. Friend talked about the missionary work of Sir Bob Geldof. Will he be undertaking it with the Conservatives in Canada?

Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer

That is all the more reason for the missionary work about which I talked earlier. I am sure that it could be effective over a period of time. Let us not forget when we are facing up to problems that involve public expenditure that the last Conservative Government halved overseas development aid; we have now doubled overseas development aid. If the Conservatives are going to support us in increasing overseas development aid, I welcome that, but it means a commitment of additional resources to enable poorer people in the world to have education and health.

Photo of Julie Kirkbride Julie Kirkbride Conservative, Bromsgrove

In relation to the G8, I was delighted to hear what the Chancellor said earlier about free trade and the importance of allowing countries to trade their way out of poverty. To that end, what negotiations has he had with his erstwhile friend, or perhaps foe, Commissioner Mandelson, whose support for French farmers seems to be one of the principal obstacles to freer trade in the world today?

Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer

I think we know that the European Union has made proposals which reform the agricultural policy, but that more must be done. I was describing how, at the G8 meeting in December, India and Brazil joined our discussions and made proposals to modify their position, subject to America and Europe looking at theirs. It is important over the next few weeks that America and Europe look at their position and see whether they can make the concessions that are necessary for a trade agreement to take place. Again, I hope that there will be all-party support for this.

Photo of Damian Green Damian Green Shadow Minister (Home Affairs)

In recent years the G8 has quite properly concentrated on African debt relief. The Chancellor will be aware that in other parts of the world, notably eastern Europe, there are countries afflicted by poverty and debt. It would be particularly ironic if during the Russian presidency of the G8 those countries continue to suffer, especially as many of their economies—Ukraine and Moldova spring to mind—have been damaged by Russia's recent actions which not only threatened the cut-off of gas supplies, but the growth potential of their economies. Will the Chancellor ensure that during the Russian presidency that country does not continue to try to bully its poor neighbours, but concentrates on debt relief in that part of the world as well?

Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer

Sometimes it is difficult to see the connection that the hon. Gentleman is making between debt relief and Russian policy towards Ukraine. Two of the countries to receive debt relief under the proposal passed by the International Monetary Fund board and the World Bank board are eastern European countries. They will benefit from the measures that we are taking.

As for countries toward the east of Europe, it is remarkable that some of the poorest countries, which have now joined the European Union, are prepared to contribute aid themselves. That is a welcome sign. We will of course look at the debt relief proposals of other eastern European countries, but the priority countries are obviously those that, according to income per head, are the poorest in the world, and they are mainly in Africa, Asia and Latin America.