§ Mr. Boateng
There is no requirement for heavily indebted poor countries (HIPCs) to borrow in order to qualify for debt relief under the HIPC initiative. A key feature of HIPC is that debt relief should be linked to poverty reduction, and the conditions for the HIPC initiative reflect this.
In order to qualify for debt relief, countries must develop a nationally-owned and led poverty reduction strategy, which sets out how the country will spend savings from debt relief, together with other resources and aid flows, in order to maximise the impact on poverty reduction.
For all countries that have qualified for debt relief, the IMF and World bank have carried out a detailed debt sustainability analysis, which Treasury officials, together with colleagues in the Department for International Development, have examined carefully and commented on, taking into account any new concessional borrowing to finance the poverty reduction strategies.245W
These analyses underline the critical importance of further financial support for many HIPC countries if they are to achieve the millennium development goals. For this reason the UK Government have been at the forefront of pressing for substantial increase in the global levels of development finance including grants and highly concessional loans. They have also insisted that these analyses are updated to take into account worsening global growth prospects and declines in terms of trade.