The UK Government play a leading role in resolving the debt problems of the poorest countries, and as part of this, we have been at the forefront of international initiatives on responsible lending and borrowing. We strongly support the Debt Sustainability Framework (DSF), introduced by the International Monetary Fund (IMF) and World Bank in April 2005. This framework helps countries and lenders make informed decisions about new lending, and it determines the terms on which the World Bank and others provide support. Assistance is provided on grant terms to countries that risk accumulating too much debt.
The UK has been working within the Organisation for Economic Co-operation and Development (OECD) to build support for the DSF. In January, members agreed guidelines on their own new lending to the poorest countries. Since 1997, the Government have been carefully examining new lending to heavily indebted poor countries. We provide support for a proposed project only if it is clear that the country can afford to repay the loan and that the lending clearly contributes to a country's economic and social development. DFID also funds work to build the debt management capacity of heavily indebted poor countries.
The UK has been a strong supporter of the Debt Sustainability Framework (DSF), introduced by the International Monetary Fund (IMF) and World Bank in April 2005. It guides borrowers and lenders in considering new loans. It balances the financing countries require for development with the need to reduce the risks of an excessive build up of debt in the future. The Department for International Development (DFID) works closely with the Export Credit and Guarantee Department (ECGD) and HM Treasury to ensure all export credits provided by the UK are fully consistent with the DSF. The UK is also working hard internationally to support the DSF. Within the Organisation for Economic Co-operation and Development (OECD), we have agreed guidelines on lending to poor countries which came into effect in January 2008.
The DSF is a framework that guides the terms on which the existing aid programmes of the major multilateral development banks (MDBs) are provided. It is used by the World Bank, the African Development Bank and the Asian Development Bank. The DSF assesses each country's debt situation and the MDBs provide all their aid as grants to any country at risk of debt distress.