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Volume 402: debated on Thursday 3 April 2003

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To ask the Secretary of State for International Development what mechanisms are in place to ensure the proper ownership of the Heavily Indebted Poor Country Initiative by debtor nations. [106185]

The enhanced Heavily Indebted Poor Countries (HIPC) Initiative was agreed by the international community at the Annual Meetings of the World bank and the IMF in September 1999. These institutions work jointly with the HIPC countries to assess the level of debt relief required to bring debt sustainability ratios down to the HIPC thresholds-150 per cent. debt to export earnings and 250 per cent. debt to government revenue. Linked to this process, countries are required to develop national poverty reduction strategies setting out how government resources, including savings from debt relief, will be spent. These strategies, which are produced in consultation with civil society and donors, are increasingly owned and led by the countries themselves, reflecting a fundamental change in the relationship between donors and developing country partners.

To ask the Secretary of State for International Development what steps she is taking, along with other donor country governments, to improve long-term debt sustainability in heavily indebted poor countries. [106191]

The UK, along with other donors, is committed to countries exiting the HIPC process with sustainable levels of debt. The World bank and the IMF have agreed to provide additional debt relief at Completion Point to those countries that have suffered a fundamental change in their economic circumstances due to external shocks. The UK is pressing these institutions to widen their approach to topping up, so that any HIPC eligible country facing unsustainable debts, that has demonstrated its commitment to poverty reduction and economic reform, should qualify for this additional relief. It is essential that countries take strong measures to improve their economic position in order to maintain long term debt sustainability. This means strengthening their debt management offices, taking out new borrowing on concessional terms only, and diversifying their export markets. Through the multi donor HIPC Capacity Building Programme, we are helping countries to learn to plan and manage their debt more effectively, and to negotiate with their creditors better terms on their external debts.