Mozambique (Debt)

Mr. Hopkins

To ask the Chancellor of the Exchequer if he will make a statement on the progress of Mozambique in respect of the Heavily Indebted Poor Countries Initiative. [34645]

[holding answer 25 March 1998]: The position after the Paris Club meeting in January was that Mozambique still required $100 million to ensure that its debt burden will be reduced to a sustainable level under the HIPC initiative. Last month, the Government announced that the UK would contribute an additional $10 million toward meeting that gap. Other countries have now begun to respond to our lead, and indicate their intention to contribute.

Table B5: Projections of budget deficits and debt¹
			Per cent. of GDP
	Outturn 1996–97	Estimate 1997–98	1998–99	1999–2000	Projections 2000–01	2001–02	2002–03
	Outturn 1996–97	Estimate 1997–98	1998–99	1999–2000	Projections 2000–01	2001–02	2002–03
GGR	38.3	39.6	39.9	39.9	40.3	40.5	40.5
Tax/GDP ratio²	36	37.1	37.7	37.4	37.5	37.8	37.8
(a) ¾ per cent, real CT growth
GGFD³	3.8	1	0.4	–0.6	–1.5	–2.6	–3.4
Current balance	–2.7	–0.2	0.4	1.4	2.3	3.4	4.1
PSBR	3	0.6	0.5	–0.3	–1.3	–2.2	–3.2
Net public sector debt	45	43.5	42.1	40.2	37.4	33.7	29.3
General government gross debt⁴	54.3	51.9	50.5	48.5	45.5	41.6	37
(b) 1½per cent. real CT growth
GGFD³	3.8	1	0.4	–0.3	–1	–1.8	–2.3
Current balance	–2.7	–0.2	0.4	1.2	1.9	2.6	3.1
PSBR	3	0.6	0.5	–0.1	–0.8	–1.5	–2.1
Net public sector debt	45	43.5	42.1	40.5	38.1	35.1	31.7
General government gross debt⁴	54.3	51.9	50.5	48.7	46.2	43	39.4
(c) 2¼ per cent. real CT growth
GGFD³	3.8	1	0.4	–0.1	–0.5	–1	–1.2
Current balance	–2.7	–0.2	0.4	0.9	1.4	1.9	2.1
PSBR	3	0.6	0.5	0.2	–0.3	–0.7	–1.1
Net public sector debt	45	43.5	42.1	40.7	38.9	36.6	34.2
General government gross debt⁴	54.3	51.9	50.5	49	46.9	44.4	41.8
¹ GGFD, current balance and PSBR exclude windfall tax receipts and associated spending.
² As defined in Table B8.
³ UK national accounts definition.
⁴ Ratio on a Maastricht basis. GDP is on an ESA79 basis, year ending in March.

Table B8: Total receipts
			Per cent. of GDP
	Outturn 1996–1997	Estimate 1997–98	1998–99	1999–2000	Projections 2000–01	2001–02	2002–03
	Outturn 1996–1997	Estimate 1997–98	1998–99	1999–2000	Projections 2000–01	2001–02	2002–03
Income tax (gross of tax credits)	9.5	10	10.3	10.6	10.8	10.9	11
Income tax credits¹	–0.3	–0.4	–0.2	–0.4	–0.7	–0.8	–0.8
Corporation tax	3.7	3.8	3.6	3.7	3.7	3.9	3.7
Windfall tax	—	0.3	0.3	—	—	—	—
Value added tax	6.2	6.4	6.4	6.4	6.3	6.3	6.2
Excise duties²	4.1	4.2	4.4	4.5	4.6	4.7	4.8
Other taxes and royalties³	6.5	6.5	6.5	6.5	6.6	6.5	6.5
Social security contributions	6.3	6.3	6.4	6.3	6.3	6.4	6.4
Net tax and social security contributions⁴	36.0	37.1	37.7	37.4	37.5	37.8	37.8
Other receipts and accounting adjustments⁵	2.1	2.2	1.9	2.0	2.3	2.1	2.2
Total receipts	38.1	39.3	39.6	39.4	39.8	40.0	40.1
Total receipts (£ billion)	286.4	313.1	330.1	344.0	364.0	382.8	402.4
¹ Mainly MIRAS and tax reliefs under the Working Family Tax Credit scheme (see paragraph B59 in conventions used in presenting the public finances).

² Fuel, alcohol and tobacco duties.
³ Includes Council Tax and money paid into the National Lottery Distribution Fund, as well as other central government taxes. Net of bus fuel duty rebate (previously netted off excise duties).

⁴ Net of income tax credits, cash basis.
⁵ Includes tax credits scored as public expenditure (see paragraph B60 in conventions used in presenting the public finances).

We hope that a decision on the level and timing of Mozambique's debt relief under the Heavily Indebted Poor Countries (HIPC) initiative will be reached soon.

Volume 309: debated on Friday 27 March 1998