Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment he has made of the potential merits of (a) debt cancellation for lower-income countries from Governments, the IMF and World Bank, the private sector and all other creditors for 2020 and 2021 and (b) bringing forward legislative proposals similar to the Debt Relief (Developing Countries) Act 2010 to enforce on the private sector the terms of an international agreement for debt relief.

The Government is concerned about the debt vulnerabilities of low-income developing countries, which have been exacerbated by the COVID-19 pandemic.

The UK cancelled most of our low-income developing country debt under the Heavily Indebted Poor Countries (HIPC) Initiative. However, we have remained a global leader in advancing sovereign debt transparency and sustainability. In April 2020 the Chancellor joined his G20 counterparts to commit to a temporary suspension on debt service repayments from the 77 poorest countries under the debt service suspension initiative (DSSI). To date, the DSSI has supported 43 countries which have requested suspensions by freeing up $5 billion to fund their COVID-19 responses. Given the depth of liquidity needs in these countries, the UK supports an extension of the DSSI into 2021.

The G20 agreed private sector DSSI participation should be voluntary and at borrowers’ discretion. The Government continues to support this approach, which helps protect these countries’ hard-won market access which will be essential for financing COVID recovery. Where borrowers do make requests, private creditors should implement the DSSI. Where sovereign debt reductions are necessary, it will be important for there to be fair and timely burden sharing between all creditor types, including commercial creditors.