§ 18. Ann McKechin
To ask the Secretary of State for International Development what reforms she plans to support the heavily indebted poor countries initiative when the issue is discussed at the autumn meetings of the World bank and the IMF. 689W
§ Clare Short
We are currently examining a range of options for discussions about the Heavily Indebted Poor Countries (HIPC) Initiative at the Annual Meeting of the World bank and IMF this autumn. Our key priority is to ensure that no country exits the HIPC Initiative with an unsustainable debt burden. We also need to look at debt relief in conjunction with other policies and instruments, to ensure that countries committed to poverty reduction are able to finance their poverty reduction strategies.
§ Clare Short
The Government has been working to try to ensure that countries exit the Heavily Indebted Poor Countries (HIPC) Initiative process with sustainable debt levels. At the Annual Meetings of the World bank and IMF in Ottawa last November, we raised this concern and asked the World bank staff to revisit the debt sustainability analyses of all commodity dependent low-income countries, including H1PCs. The IMF and World bank analysis, published last month, shows that, although the situation varies from country to country, the external debt indicators for most HIPC countries have deteriorated, and several HIPC countries now face unsustainable debt burdens as a result. Following UK pressure, the World bank and IMF boards have agreed to provide additional relief to countries in this situation. This was reconfirmed at the Spring Meetings last month, and Burkina Faso became the first HIPC country to benefit from 'topping up' at Completion Point. We are also pressing the Bank and Fund to take more concrete action to encourage non-Paris Club creditors that have not yet delivered debt relief, to do so.
Debt relief is, however, not a panacea and further measures, including sound economic and debt management by H1PCs themselves, will be required beyond HIPC, to enable countries to maintain debt sustainability levels. To this end, the UK is co-financing a multi-donor funded project to help strengthen the debt management capacity in HIPC countries.