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Third-World Debt

Volume 403: debated on Tuesday 8 April 2003

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To ask the Chancellor of the Exchequer what percentage of third world debt owed to the UK is debt owed to the Export Credits Guarantee Department. [105062]

Of the total debt currently owed to the UK Government by developing countries over 95 per cent. is owed to the Export Credits Guarantee Department. The key reason for this high percentage of commercial credits is that Official Development Assistance provided by the UK normally takes the form of grants as compared with concessional loans so there is little debt owed to the UK other than amounts owed to ECGD.

The UK is at the forefront of the debate on international debt relief and participates fully in the enhanced Heavily Indebted Poor Countries (HIPC) initiative agreed at Cologne in 1999 that makes provision for the cancellation of around US$100 billion of debt. Moreover, the UK goes beyond the terms agreed under the HIPC initiative and always provides 100 per cent. debt relief. So for the 26 countries that have reached Decision Point in the HIPC initiative the UK is providing 100 per cent debt relief.

In addition, for those HIPCs yet to reach Decision Point the UK operates a unilateral "Hold-in-Trust" policy. For these countries yet to secure debt relief because of conflict, civil unrest or the absence of a poverty reduction programme, any debt payments made are held in trust until they can be returned to fund poverty reduction.