Low and Middle-income Countries: Debt Restructuring

Lord Naseby Excerpts

Tuesday 12th March 2024 Lords Chamber

[Lord Cameron of Chipping Norton (Con)]

It is very important that we provide alternatives to finance so that Commonwealth and other countries have a choice. I am very proud of the work I did to set up the Caribbean infrastructure fund, for instance, and we are looking again at whether we can refresh and renew that. We are also trying to get the multilateral development banks to expand their balance sheets and lend more to poorer countries. These are ways in which we can offer countries alternatives to Chinese finance in the way that he suggests.

[Lord Naseby (Con)]

My Lords, should we not look at the recent example of Sri Lanka, which decided that it had to seek the help of the IMF? The IMF responded speedily, but the problem was the private creditors and the time that took. Is there not a case for perhaps the IMF to produce some dimension whereby there is a structure that all private creditors can use, or be advised to use, so that a speedy decision is made for the benefit of the poor people who are suffering?

[Lord Cameron of Chipping Norton (Con)]

If bonds are the form of lending, there are collective action clauses that can prevent private sector hold-outs. With loans, you have these majority voting provisions so that a group of private investors cannot hold up the resolution of those debts. That is the right way forward. On Sri Lanka, we welcome the official creditor group deal that was reached on 29 November 2023; the bondholder committee is currently in negotiations with the Government of Sri Lanka. We do not comment on ongoing restructuring programmes, but we hope that a deal will be arranged soon.