Clause 3

Part of Debt Relief (Developing Countries) Bill – in a Public Bill Committee at 10:45 am on 9th March 2010.

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Photo of Stephen Timms Stephen Timms Parliamentary Under-Secretary (Department for Business, Innovation and Skills) (Digital Britain) (also HM Treasury), Financial Secretary (HM Treasury) (also in the Department for Business, Innovation and Skills) 10:45 am, 9th March 2010

The World Bank’s debt reduction facility helps settle the commercial debts of HIPCs on terms that are compatible with the HIPC initiative. It negotiates buy-backs at the deeply discounted rates consistent with the initiative by using funding from donors, including the UK, to purchase and then cancel debts from commercial creditors that choose to participate. In the case of Liberia, last year’s operation bought back 97.5 per cent. of eligible debt, with a full value of $1.2 billion, for just 3 per cent. of that value. Of course, we cannot be absolutely sure about what will happen because of secrecy on the part of the commercial players involved. There is bound to be some uncertainty about the number of cases that will come forward, but the Bill prevents creditors from taking action against the HIPCs to get full value.

Last year’s World Bank survey of HIPC Governments reported 14 active or unresolved law suits by commercial creditors worldwide, with a total value of $1.2 billion. Active law suits are reported against, among others, Ethiopia, Uganda, Sierra Leone—mentioned by the hon. Member for Banbury—and the Democratic Republic of Congo. The survey has reported 54 cases since 2002, about a fifth of which have been brought in the UK, and new cases continue to arise.