§ Lord Judd
asked Her Majesty's Government:
What action they are taking to ensure that the full 1 billion dollar top-up required for the heavily indebted poor countries trust fund is provided so that it can play its part in the granting of debt relief; and how soon they expect that objective to be fulfilled.[HL4932]
§ The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord McIntosh of Haringey)
The UK Government remain absolutely committed to the rapid and full implementation of the heavily indebted poor countries (HIPC) initiative to ensure that it delivers a robust exit from unsustainable debt for the world's poorest countries.
As a result of the deterioration in global growth prospects and the decline in terms of trade, some HIPC countries are at risk of exiting the initiative with unsustainable levels of debt. At the G8 summit in Kananaskis in June 2002, the UK took a leading role in pushing for agreement to provide additional funding—so-called "topping up"—to support countries that reach completion point with debt levels that have deteriorated due to exceptional and exogenous factors. It was agreed at this summit that G8 and other donors would meet the estimated 1 billion dollar shortfall in HIPC trust fund financing. At the subsequent technical meeting in Paris in October 2002, pledges were made by creditor countries. The UK provided 120 million dollars against the shortfall of 1 billion dollars.
Topping up is agreed on a country-by-country basis, and so far only one country—Burkina Faso—has received topping up at completion point, which the UK strongly supported. The UK is committed to supporting topping up for countries whose debt levels have risen above the 150 per cent debt-to-export threshold as a result of exceptional and exogenous factors. In addition, the UK supports a change in the methodology to exclude additional bilateral assistance from the calculation of topping up at completion point, which could provide an additional 1 billion dollars to support poverty reduction.
The HIPC initiative has an important role to play in maximising the resources available for poverty reduction in developing countries. However, unless there is an increase in the volume of resources available 61WA from donors to poor countries, additional debt relief would simply reallocate resources from one form of financing to another, and from non-HIPC poor countries to H1PC countries, without adding to the overall financing available for poverty reduction. Furthermore, all HIPC countries would still need additional aid to meet the Millennium Development Goals even if all of their debt from the World Bank and IMF were forgiven. That is why the UK's proposal for an international finance facility is so important. It can provide the much-needed substantial increase in resources that debt relief alone would not achieve and that could be disbursed by way of grants and additional debt relief.