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Africa: Sovereign Debt

Volume 732: debated on Tuesday 2 May 2023

7. What steps he is taking to help low and middle-income African countries with restructuring sovereign debt. (904718)

We are playing our part in ensuring timely treatment where the UK is a creditor, such as in Zambia and Ghana, and pushing for improvements to the G20 common framework and other debt relief processes.

In Somalia in 2020, a staggering 98.9% of Government revenue was spent on debt financing. Clearly, it is impossible for a state to tackle poverty in those circumstances, but the Government’s most recent international development strategy largely omits debt relief. While the Government are currently considering the International Development Committee’s report on debt relief, please will the Minister commit to prioritising this issue in the future?

The hon. Lady is quite right to raise the issue of Somalia, which is one of only three countries, I think, that has not yet received its heavily indebted poor countries settlement. She will be pleased that Britain is in the lead on the climate-resistant debt clauses, which will mean that, when a disaster strikes or when there is a specific event, countries will be able to delay all capital and interest payments for two years, which will then be added to the back end of the loan. Therefore, Britain is in the forefront of addressing this very important problem, which is rising in Africa.

Last week, the Minister said:

“A time when crises are everywhere, but leadership is not. When we can save a bank in California in three days, but Zambia waits more than two years for debt relief.”

I agree. However, the Minister knows that 90% of international bonds owed by countries eligible for the common framework are governed by English law, so what leadership is he demonstrating to ensure vulture funds cannot block debt-restructuring processes by simply refusing to come to the table?

The hon. Lady makes a very good point. I am flattered that she has read the speech I gave at Chatham House last Thursday. We are extremely concerned about the use of vulture funds, and Britain has been the lead country in trying to clamp down on them. I assure her that we will continue with that work.