§ Mr. Bowen Wells
asked the Chancellor of the Exchequer what proposals he made at the interim committee of the International Monetary Fund and the development committee of the World Bank to deal with the chronic indebtedness of many countries in Africa and South America both to private banks and international institutions; what were the reactions of those to whom he made the proposals; and what further action he proposes.
§ Mr. Ian Stewart
At the interim and development committee meetings, my right hon. Friend the Chancellor gave his support to the present debt strategy which involves asking all creditors to contribute new money in response to commitment to structural adjustment by debtor countries.
He made three specific proposals to help relieve the debt burden of the poorest and most heavily indebted countries in sub-Saharan Africa that are pursuing satisfactory adjustment policies. Firstly, creditor nations should convert their aid loans into outright grants; the United Kingdom has almost completed this process for its loans to sub-Saharan Africa and many other creditors are following suit. His second proposal was to reschedule other official loans over longer periods; generous grace periods and repayment periods of up to 20 years. His third proposal was that creditor nations should join together to reduce the interest rate on the debt to a few points below market levels.
Reactions to these proposals have been encouraging. Over the next few months the United Kingdom will be working with other Government creditors on the details of the scheme.