G20: Debt Cancellation

Baroness Falkner of Margravine Excerpts

Wednesday 10th June 2020 Lords Chamber

[Baroness Penn]

The noble Baroness is right that the scale of the economic crisis facing these countries is significant. The IMF predicts that global GDP will fall by 3% in 2020 and says it is the worst global recession since the great depression and much worse than the 2008 financial crisis. We are providing a huge amount of additional support, including through the IMF, which has doubled to $100 billion the emergency financing support available to its members.

[Baroness Falkner of Margravine (Non-Afl) [V]]

My Lords, I am second to none in wanting to assist poorer countries, but will the noble Baroness accept, in the context of debt forgiveness, that the World Bank has done recent research to show that aid flows through the poorest countries straight back into the wealthier countries—something called aid leakage? So unless we want to give money to Switzerland, Luxembourg, the Cayman Islands and those sorts of places, the best way to help the poorest countries is through a vaccine, through medical and pharmaceutical products and, most importantly, through the special drawing rights of the IMF mentioned by the noble Baroness, Lady Kramer.

[Baroness Penn]

The noble Baroness is correct that we need to ensure that the support we give to these countries actually flows into supporting social and health programmes that help to tackle this virus. That is why one of the conditions of the debt service suspension initiative is that the financial headroom it creates for those countries is actually directed towards those services.