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Debts: Developing Countries

Treasury written question – answered on 22nd May 2020.

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Photo of Rachael Maskell Rachael Maskell Shadow Minister (Digital, Culture, Media and Sport)

To ask the Chancellor of the Exchequer, what recent discussions he has had with his international counterparts on the potential merits of cancelling global debt in response to the covid-19 pandemic.

Photo of John Glen John Glen Minister of State (Treasury) (City), The Economic Secretary to the Treasury

It is vital that creditors work together to ensure that countries especially vulnerable to the pandemic can protect their citizens and economies. The Chancellor joined his G20 counterparts to commit to a temporary suspension on debt service repayments from the poorest countries. The government will continue to work through the G20 and Paris Club of official creditors to monitor sovereign debt vulnerabilities closely, and will respond to emerging balance of payments issues in coordination with the international financial institutions, the Paris Club, and commercial lenders.

At Budget, the Chancellor announced a leading contribution of up to £150m to the IMF’s Catastrophe Containment and Relief Trust, which will provide the world’s poorest countries relief on IMF repayments. The government has committed to double its existing £2.2bn loan to the IMF’s Poverty Reduction and Growth Trust to provide financial assistance to the poorest and most vulnerable members in their fight against COVID-19.

The UK recently led the development of a G20 Action Plan to support the global economy though the COVID-19 pandemic. The Chancellor will continue to have regular engagement with G20 counterparts on the international community’s response to COVID-19.

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