Developing World: Debt Reduction

Baroness Northover Excerpts

Tuesday 13th February 2024 Lords Chamber

[Lord Cameron of Chipping Norton (Con)]

I thank the noble Lord for his question. We are happy to accept the IMF definition of debt sustainability and to use it as a baseline. We are happy to look at other ideas but, given the IMF’s role, that makes sense. I completely accept what lies behind the noble Lord’s question: 58% of low-income countries are now either in debt distress or at risk of it, so he raises an important point. However, I think the definition is done by the IMF.

[Baroness Northover (LD)]

My Lords, climate change is already hitting the poorest the worst and the most, often in indebted countries. Although it is welcome that a loss and damage fund was agreed at the last COP, does the Foreign Secretary agree that what has been pledged so far—including, I am afraid, by the UK—is totally inadequate? Does he further agree that it is not only right to scale this up but in our interest, as we seek to reduce the conflict and migration that are likely to be caused by climate change, which will be much more costly?

[Lord Cameron of Chipping Norton (Con)]

We have doubled our commitments to climate finance. One of the successes of COP was that the climate finance funds are now considerable, running into many billions. I identify the problem more as small countries, particularly island and developing states, not being able to access that money because they do not have the expertise, the lawyers, the bankers, the officials and so on. That is a problem that my officials are trying to solve. In the area of debt itself, the climate resilience debt clauses that we are now writing into debt, which give states a holiday from debt repayments if they suffer a climate disaster or some other unforeseen event, can be a big part of the future too.