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Development Aid

Volume 487: debated on Thursday 5 February 2009

To ask the Secretary of State for International Development what steps he is taking to ensure that the Government's policy on attachment of economic policy conditions to aid and debt relief is extended to multilateral lenders, with particular reference to the IMF and World Bank Heavily Indebted Poor Countries debt relief initiative. (253419)

The UK's policy is clear that conditionality must not be used to impose policy on governments and that conditions should be limited to issues essential to ensure programmes are successful. The UK continues to press the World Bank and IMF to reform their conditionality practice in line with our approach and we have had some success. The World Bank has stopped using prescriptive conditionality and has adopted good practice principles on conditionality. These provide clear guidelines to staff and emphasise a need for country ownership and fewer conditions. The IMF also agreed to limit the number of conditions used, to justify each condition and focus on major macroeconomic issues.

The Heavily Indebted Poor Countries (HIPC) Initiative provides large scale irrevocable debt cancellation. It is therefore essential that we can have confidence that debt relief will be used in ways that will benefit poor people. Conditions are agreed with each country, focussing debt relief on poverty reduction, economic management and financial accountability. The UK has pressed the World Bank and IMF to ensure conditions reflect countries' priorities and are applied flexibly where appropriate. Several countries have received their debt cancellation without having met all triggers, but when strong overall progress had clearly been made.