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Debt Relief

Volume 404: debated on Tuesday 29 April 2003

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To ask the Chancellor of the Exchequer what estimate he has made of the total cost to the Exchequer of cancellation of the debts of the countries which have met the requirements for the qualification stage of the HIPC debt relief process. [109780]

As at 31 March 2003, the amount of debt agreed multilaterally under the HIPC initiative as being unrecoverable and consequently written off by the Export Credits Guarantee Department, amounted to some £859.5 million. These debts resulted from insurance and guarantee claims paid out mainly in the 1980s. Additional relief given in accordance with the Government's 100 per cent, forgiveness policy for HIPCs totals £41.8 million. All aid debts to low-income countries had already been written off.In addition the UK has so far pledged US $495 million to the HIPC Trust Fund to cover the costs of multilateral HIPC debt relief, and we hold all debt payments in trust for the day they can be returned to fund poverty reduction for all countries still to secure debt relief through HIPC because the absence of a poverty reduction programme.The Government acknowledges that debt relief is not a panacea for broader economic development problems; even the provision of 100 per cent. debt relief to all low-income countries would still fall short of the resources needed to meet the Millennium Development Goals. That is why the Chancellor and the Secretary of State for International Development have proposed an International Finance Facility (IFF) that would seek to double the amount of development aid from just over $50 billion a year today to $100 billion per year in the years to 2015.