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To ask the Minister of State, Foreign, Commonwealth and Development Office, with reference to the oral contribution of the Secretary of State for Foreign, Commonwealth and Development Affairs of 12 March 2024, Lords Official Report, column 1910, If he will publish a summary of Treasury advice received by his Department...
To ask the Minister of State, Foreign, Commonwealth and Development Office, with reference to the oral contribution of the Secretary of State for Foreign, Commonwealth and Development Affairs of 12 March 2024, Lords Official Report, column 1910, If he will publish a summary of Treasury advice received by his Department...
The Government recognises the importance of private sector lending to low-income countries. The UK, alongside international partners, expects private creditors to participate in debt restructurings on terms at least as favourable as bilateral (i.e. country) creditors.
At this time, the Government is focused on delivering a market-based (contractual) approach to private sector participation in debt restructuring, which the IMF have found to be largely effective in recent years. As part of this, the UK has led the development of Majority Voting Provisions for private syndicated loans. We engage regularly with the Treasury on this issue.
The Government recently set out our commitments on developing country debt in our international development White Paper.
The Government recently set out our commitments on developing country debt in our international development White Paper.
Whether he has had recent discussions with his international counterparts on a strategy to reduce debt in the developing world.
The hon. Lady is right to point to the considerable difficulties that countries are finding. Some 15% of low-income countries are in debt distress, and 45% are at higher risk of that. The African Development Bank says that debt repayments in 2024 are likely to be six times the level of 2021. That is why Britain is working with other creditors to secure debt restructurings, most often through the G20 common framework, but also through the Paris Club.
The hon. Lady is right to point to the considerable difficulties that countries are finding. Some 15% of low-income countries are in debt distress, and 45% are at higher risk of that. The African Development Bank says that debt repayments in 2024 are likely to be six times the level of 2021. That is why Britain is working with other creditors to secure debt restructurings, most often through the G20 common framework, but also through the Paris Club.
The main mechanism to tackle the debt crisis, the common framework for debt treatment, is failing due to the low level of participation by private creditors who own around 40% of low-income country debt. Does the Minister agree that there is strategic need for the United Kingdom to take debt reduction seriously and change its approach, given the crisis in Africa and the growing role of China and Russia in the developing world?
Whether he has had recent discussions with his international counterparts on a strategy to reduce debt in the developing world.
Whether he has had recent discussions with his international counterparts on a strategy to reduce debt in the developing world.
The Government recently set out our commitments on developing country debt in our international development White Paper.
To ask the Minister of State, Foreign, Commonwealth and Development Office, what recent assessment he has made of the potential implications for his policies of Zambia's debt situation.
To ask the Minister of State, Foreign, Commonwealth and Development Office, what recent assessment he has made of the potential implications for his policies of Zambia's debt situation.
The UK is committed to supporting Zambia's economic recovery. We welcome the deal between the Government of Zambia and the Official Creditor Committee, which represents significant progress in Zambia's path to debt sustainability. While the Common Framework for debt treatment has been a major step forward, it has taken too long for Zambia to get to this point. That is why in the recently published International Development White Paper, the UK government has committed to working to strengthen the international debt architecture to enhance its co-ordination, predictability and timeliness.
To ask the Secretary of State for Foreign, Commonwealth and Development Affairs, what assessment he has made of the implications for his policies of the joint statement by African faith leaders on 8 August 2023 on reducing debt in African countries.
To ask the Secretary of State for Foreign, Commonwealth and Development Affairs, what assessment he has made of the implications for his policies of the joint statement by African faith leaders on 8 August 2023 on reducing debt in African countries.
The UK Government notes the statement by African Faith Leaders. We are working to ensure swift progress and effective implementation of debt treatments and are working to deliver a long-term, sustainable approach to dealing with debt restructurings through the Common Framework. The UK is leading improvements to the global debt architecture and is supporting efforts to find coordinated solutions on debt including through the Global Sovereign Debt Roundtable. During the pandemic, the UK supported the G20 Debt Service Suspension Initiative and contributed £150 million to the International Monetary Fund (IMF) Catastrophe Containment and Relief Trust to provide debt relief.
To ask the Secretary of State for Foreign, Commonwealth and Development Affairs, whether debt relief for Somalia has been included in his Department's accounts for (a) 2023-24 and (b) future financial years.
To ask the Secretary of State for Foreign, Commonwealth and Development Affairs, whether debt relief for Somalia has been included in his Department's accounts for (a) 2023-24 and (b) future financial years.
The UK continues to be Somalia's debt relief champion, as part of the Heavily Indebted Poor Countries Initiative (HIPC). The UK provided debt relief when Somalia reached HIPC Decision Point in 2020, both bilaterally and helping to clear Somalia's arrears to the International Financial Institutions.
The UK is committed to providing debt relief on our outstanding bilateral debt to Somalia when it reaches HIPC Completion Point and the relevant agreements signed. His Majesty's Government has provisioned for this. The IMF assess HIPC Completion Point to be achievable by the end of 2023.
To ask the Secretary of State for Foreign, Commonwealth and Development Affairs, whether his Department has taken recent steps to help reduce debt in the global South; and whether he plans to bring forward legislative proposals to require private creditors to participate in debt reduction in that region.
To ask the Secretary of State for Foreign, Commonwealth and Development Affairs, whether his Department has taken recent steps to help reduce debt in the global South; and whether he plans to bring forward legislative proposals to require private creditors to participate in debt reduction in that region.
The UK is a leader on international debt issues. We are full participants in international debt initiatives, like Heavily Indebted Poor Countries (HIPC), Multilateral Debt Relief Initiative (MDRI), the Debt Service Suspension Initiative (DSSI) and Common Framework and as a member of the Paris Club.
The UK, alongside international partners, expect private sector creditors to participate in debt restructurings on terms at least as favourable as country creditors and we remain focused on delivering UK-led contractual reforms to enhance private sector participation.
The Government recognise the challenging debt situation facing many African countries. The UK is working with international partners to address rising debt vulnerabilities.
The Government recognise the challenging debt situation facing many African countries. The UK is working with international partners to address rising debt vulnerabilities.
What recent assessment he has made of the potential impact of levels of sovereign debt in African countries on their resilience to climate change.
As the hon. Gentleman knows, we are looking at that specific issue. We think there is a case for majority voting when it comes to debt settlements, and we are exploring all that. He is right to emphasise that 15% of low-income countries are already in distress and 45% are at high risk of entering debt distress. Next week, at the Macron summit in Paris, Britain will be driving forward the climate-resilient debt clauses, which our export credit agency, UK Export Finance, was the first to start to put into grants. That will make an enormous difference, and we are pressing for all creditors to offer such clauses in their loans.
As the hon. Gentleman knows, we are looking at that specific issue. We think there is a case for majority voting when it comes to debt settlements, and we are exploring all that. He is right to emphasise that 15% of low-income countries are already in distress and 45% are at high risk of entering debt distress. Next week, at the Macron summit in Paris, Britain will be driving forward the climate-resilient debt clauses, which our export credit agency, UK Export Finance, was the first to start to put into grants. That will make an enormous difference, and we are pressing for all creditors to offer such clauses in their loans.
Every dollar spent by low-income countries on servicing unsustainable debt is a dollar not spent on providing basic services and tackling climate change. I know that the Minister wants to make a difference on this, but the status quo clearly is not working. Given that 90% of developing country debt contracts are governed by English law, why will the Government not agree even to consult on legislative opportunities to compel private creditors to take part in debt restructuring, to make them part of the solution, not the problem?
What recent assessment he has made of the potential impact of levels of sovereign debt in African countries on their resilience to climate change.
What recent assessment he has made of the potential impact of levels of sovereign debt in African countries on their resilience to climate change.
The Government recognise the challenging debt situation facing many African countries. The UK is working with international partners to address rising debt vulnerabilities.
To ask the Secretary of State for Foreign, Commonwealth and Development Affairs, what steps he is taking with Cabinet colleagues to help mitigate the impact of increases in interest rates on the debt repayments of developing countries.
To ask the Secretary of State for Foreign, Commonwealth and Development Affairs, what steps he is taking with Cabinet colleagues to help mitigate the impact of increases in interest rates on the debt repayments of developing countries.
The impact of changes in interest rates for developing countries' debt will depend on the terms of that debt, and any new debt they take on.
Those with the highest risk of debt distress receive grants from the Multilateral Development Banks (MDBs).
The Government is pressing for all creditors to offer loans with Climate Resilient Debt Clauses, which pause repayments if there is a natural disaster. UK Export Finance (UKEF) is the first export credit agency to offer these.
The Government will continue to work with its international partners in the Paris Club and the G20 to urgently address debt vulnerabilities in developing countries.
To ask the Secretary of State for Foreign, Commonwealth and Development Affairs, what assessment he has made of the urgency of the need of (a) Malawi and (b) Mozambique for debt relief following the impact of Cyclone Freddy.
To ask the Secretary of State for Foreign, Commonwealth and Development Affairs, what assessment he has made of the urgency of the need of (a) Malawi and (b) Mozambique for debt relief following the impact of Cyclone Freddy.
The Government of Malawi continues to engage with the international financial intuitions to try and achieve a sustainable debt position, and the UK is supportive of these efforts. The recently released Post Disaster Needs Assessment of the cyclone confirms that cyclone damage will cut GDP growth by an estimated 0.5 per cent this year.
The UK supported Mozambique's response to Cyclone Freddy with emergency shelter and cholera support. We are working closely with other multilaterals, to adapt existing programmes where possible to respond to Cyclone Freddy such as: Health and infrastructure/water and sanitation.
To ask the Secretary of State for Foreign, Commonwealth and Development Affairs, what assessment he has made of the potential merits of legislating to incentivise private creditors to participate in debt relief for low-income countries.
To ask the Secretary of State for Foreign, Commonwealth and Development Affairs, what assessment he has made of the potential merits of legislating to incentivise private creditors to participate in debt relief for low-income countries.
The UK, alongside the G20 and Paris Club, expect private creditors to participate in debt restructurings on terms at least as favourably as bilateral (i.e. country) creditors.
The Government is focused on delivering a market-based (contractual) approach to private sector participation, for example recently developing Majority Voting Provisions for private loans.
To ask the Secretary of State for Foreign, Commonwealth and Development Affairs, with reference to the recommendations of the International Development Select Committee in its report entitled Debt relief in low-income countries, HC 146, published on 10 March 2023, if he will hold discussions with the Chancellor of the Exchequer...
To ask the Secretary of State for Foreign, Commonwealth and Development Affairs, with reference to the recommendations of the International Development Select Committee in its report entitled Debt relief in low-income countries, HC 146, published on 10 March 2023, if he will hold discussions with the Chancellor of the Exchequer...
The Foreign Secretary and Chancellor of the Exchequer work closely together on international issues, such as pressing for progress on sovereign debt treatment at the recent International Monetary Fund (IMF)/World Bank Spring Meetings.
The UK, alongside the G20 and Paris Club, expect private creditors to participate in debt restructurings on terms at least as favourably as bilateral (i.e. country) creditors.
The Government is focused on delivering a market-based (contractual) approach to private sector participation, for example recently developing Majority Voting Provisions for private loans.
Agreed to on question.
Agreed to on question.
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.
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.
What steps he is taking to help low and middle-income African countries with restructuring sovereign debt.
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.
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.
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 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.
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.
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?
What steps he is taking to help low and middle-income African countries with restructuring sovereign debt.
What steps he is taking to help low and middle-income African countries with restructuring sovereign debt.
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.