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Debt Cancellation

Volume 448: debated on Tuesday 11 July 2006

To ask the Secretary of State for International Development what assessment he has made of the impact of alleviation of debt in Africa on health and education provision in Africa; and if he will make a statement. (83121)

Debt relief provides long-term, predictable resources for countries to spend on improving health and education. Recipients of debt relief under the heavily indebted poor countries (HIPC) initiative report their expenditure on reducing poverty (health, education, and rural and agriculture investments for example) and these expenditures increased from an average of 6 per cent. of GDP in 1999 to 9 per cent. of GDP in 2005 in the 29 countries receiving HIPC debt relief.

There is good evidence that debt relief benefits health and education provision. For example, after receiving debt relief in 2000, Ghana increased its expenditure on education, increasing the net enrolment ratio of seven to 13-year-olds by 8 per cent. and the number of secondary schools from 937 to 1,024 by 2004. In Tanzania, debt relief received in 2001, helped to increase the number of children in primary schools by over 50 per cent., build almost 2,500 new primary schools and recruit 28,000 extra teachers. If this rate of progress continues, Tanzania will meet the goal for universal primary education in the next couple of years—significantly ahead of the target date of 2015. In Uganda, debt relief has helped make possible the removal of user fees for healthcare. As a result, the number of new out-patient consultations has increased from 9.3 million in 1999-2000 to 24.5 million, indicating a doubling in the use of health services over five years. Immunisation coverage has increased from 41 per cent. in 1999-2000 to 89 per cent. in 2004-05.

When fully implemented, the new multilateral debt relief initiative (MDRI) will provide over US$50 billion of debt cancellation to up to 43 countries. Zambia has used some of its savings under MDRI to abolish health user fees in rural areas, allowing thousands of poor people to access free health care. Ghana also intends to use some of its MDRI savings for health and education, and we expect other countries to make similar commitments when their new budgets are agreed.

Health and education in Nigeria will also benefit as a result of its recent debt deal at the Paris Club. Approximately $1 billion a year that would have been spent by Nigeria on debt service will now be channelled through a poverty reduction fund with a focus on the millennium development goals. As a result, the federal health and education budgets have received an additional $167 million and $143 million respectively in 2006. The Nigerian Government have agreed that this will help to employ an additional 120,000 teachers and put 3.5 million more children into school.