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Heavily Indebted Poor Countries

International Development written question – answered on 1st May 2002.

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Photo of Caroline Spelman Caroline Spelman Shadow Minister (Women), Shadow Secretary of State for International Development

To ask the Secretary of State for International Development

(1) what action her Department is taking to ensure that the costs of the structural adjustment programmes of the HIPC Initiative are not borne disproportionately by the poor;

(2) what evidence her Department has collated on the impact that the structural adjustment programmes of the HIPC initiative has had on economic growth rates of each of the HIPC countries;

(3) what contribution the structural adjustment programmes of the HIPC Initiative has made to the good of poverty reduction.

Photo of Clare Short Clare Short Secretary of State, Department for International Development

The enhanced heavily indebted poor countries (HIPC) initiative, which was agreed in September 1999, provides deeper debt relief to poor countries committed to eradicating poverty. Up to $100 billion debt could be written off for the 42 HIPC countries, reducing their debts by more than two thirds. On average, the 26 countries that have already qualified for HIPC relief will spend three times more on the social sectors in 2002–05 than on debt service over the same period.

An important feature of the HIPC initiative is the recognition of the link between debt relief and poverty reduction in order to ensure the poor benefit from debt relief. Governments are developing national poverty reduction strategies, involving civil society and international donors, specifying how resources, including savings from debt relief, will be spent. As part of the Poverty Reduction Strategy Paper (PRSP) approach, the World bank and IMF have committed to undertaking poverty and social impact analysis (PSIA) of major macroeconomic and structural reforms likely to have significant impact on the poor. The World bank and IMF are leading a programme of work on PSIA and are realigning their programmes with PRSPs in these countries. We are supporting this work by piloting PSIA studies in six countries. We are also working with partner countries on their PRSPs, through our bilateral programmes.

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