To ask the Secretary of State for International Development what estimate he has made of the number of heavily indebted countries at risk from vulture funds’ actions; and if he will make a statement. (162388)

World Bank and International Monetary Fund staff conducted a survey on this issue in May 2007. It identified 11 heavily indebted poor countries (HIPCs) that had been targeted with lawsuits by a total of 46 litigating creditors. In addition, two countries reported being threatened by litigation.

Eight new legal actions were reported since the previous survey in 2006, of which five are against Nicaragua, two against Cameroon, and one against Ethiopia. The HIPCs facing the most litigation cases are Nicaragua, the Republic of Congo, Cameroon, and Uganda, with nine, eight, seven, and six lawsuits respectively.

This information is included in the latest annual joint World Bank/International Monetary Fund status of implementation report on the Heavily Indebted Poor Countries (HIPC) Initiative and Multilateral Debt Relief Initiative (MDRI). The report is available on the World Bank website.

To ask the Secretary of State for International Development what progress has been made on ensuring that highly indebted poor countries have access to the legal assistance they need to defend themselves against litigation from vulture funds, with particular reference to the proposals at the African Development Bank to develop a legal assistance facility to help countries facing legal action gain access to technical and legal support; and if he will make a statement. (162389)

The UK welcomes the consideration being given by the African Development Bank to develop a legal assistance facility to help countries facing creditor litigation. The bank has recently conducted a feasibility study on the establishment of such a facility. We will continue to influence and support the bank in this endeavour and to seek support from other donors for this initiative.

To ask the Secretary of State for International Development what steps he is taking to protect developing countries from the effects of the activities of vulture funds. (162492)

We are working to address this problem in two ways—by seeking to prevent debts being sold to vulture funds in the first place and by limiting the damage done by cases already under way. To reduce the risk of debts falling into the hands of vulture funds, we are working with the World Bank to help poor countries buy back their commercial debts at a discount through the Debt Reduction Facility. The debts are then dealt with and cannot be taken through a court. More than $8 billion (approx. £4 billion) of debts have already been cancelled in this way. We are also working with heavily indebted poor countries (HIPCs) to strengthen their debt management capacity and overall governance.

In cases where poor countries’ debts are already in the hands of vulture funds, we are working with the African Development Bank and others to ensure that countries have access to legal advice to help them fight these cases. The strong defence that the Government of Zambia mounted recently, for example, reduced its liability by around $40 million (approx. £20 million). It was the first defence case of this kind that has been even partially successful.

The UK will also continue to raise this issue internationally. At the recent annual meetings of the World Bank and International Monetary Fund, G7 Finance Ministers agreed to examine whether additional steps can be taken to address this problem.