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Developing Countries: Debts

Volume 490: debated on Monday 30 March 2009

To ask the Secretary of State for International Development what the Government's policy is on the establishment of a new sovereign debt work-out mechanism to deal with the debts of poor countries. (265602)

I have been asked to reply.

The UK has been at the forefront of international delivery of debt relief. The heavily indebted poor countries initiative and the multilateral debt relief initiative provide comprehensive debt relief for the poorest, most heavily indebted countries. 34 countries are currently receiving debt relief; of which 24 have received irrevocable debt cancellation, including 100 per cent. cancellation of debts to the UK and international financial institutions.

In addition, any country that experiences debt problems can also approach the Paris Club. This informal group of 19 sovereign creditors, including the UK, finds co-ordinated and sustainable solutions to sovereign debt problems.

In relation to proposals for a wider sovereign debt work-out mechanism, the Government supported earlier work by the International Monetary Fund to investigate the establishment of a sovereign debt resolution mechanism, although international consensus was not reached on the establishment of such a mechanism.