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Heavily Indebted Poor Countries Initiative

Volume 404: debated on Thursday 8 May 2003

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24.

To ask Mr. Chancellor of the Exchequer, what recent assessment he has made of the impact of reduction in commodity prices on the HIPC initiative. [111906]

The UK believes that where countries have had to contend with external shocks—such as sharp falls in the price of key export commodities—we should be generous in providing additional debt relief to promote a lasting exit from unsustainable debt.Moreover, the UK is seeking agreement that this additional debt relief or topping-up that HIPCs can receive when completing the HIPC initiative should exclude additional bilateral voluntary debt relief, to ensure fairer burden sharing between creditors and provide truly additional relief to HIPCs. This important change in the rules could provide a further US $1 billion in debt relief.The Government also believes we must be much more cautious about the forecasts we use to calculate debt sustainability. Optimistic assumptions about future growth and exports often do not reflect the reality many countries face—and unnecessarily restrict the amount of debt relief we can provide.