Question to the Foreign, Commonwealth & Development Office:

To ask the Secretary of State for Foreign, Commonwealth and Development Affairs, what assessment his Department has made of the effect of the debt levels of lower-income countries on their ability to tackle the covid-19 pandemic.

The UK Government is deeply concerned by the impact of the COVID-19 crisis on developing countries. Many entered the COVID-19 crisis in an already vulnerable position. For example, half of low-income developing countries already had high public debt levels. The crisis has brought an exceptional set of shocks: much lower exports, lower export prices, fewer financial inflows and reduced earnings from tourism. Lower GDP forecasts have made existing debt levels more worrying: the International Monetary Fund (IMF) forecasts that the average level of debt-to-GDP will be 5.1 percentage points higher in low income developing countries in 2020 than expected, and 7.3 percentage points higher in Africa. Some countries will have limited scope for additional borrowing and this, together with any increase in debt service costs could impact the availability of resources for crisis response and recovery, particularly for those countries which entered the crisis at high risk of debt distress.

In response to the crisis, the UK, alongside the G20 and the Paris Club of official creditors, has committed to a temporary suspension of debt payments from the poorest countries. So far, 42 countries have sought support and over $5 billion of debt service is expected to be deferred, allowing countries to redirect finances towards mitigating the health and economic impacts of Covid-19. This initiative will help countries tackle the Covid-19 pandemic whilst providing time to assess what future support is required.

The UK has also committed up to £150 million to the IMF's Catastrophe and Containment Relief Fund, so far benefitting 29 of the poorest countries through covering their debt repayments to the IMF. We have also committed £1 million to the African Legal Support Facility to advise African countries on debt.