Oral Answers to Questions

Kim Johnson Excerpts

Wednesday 10th June 2020 Commons Chamber

[Mary Kelly Foy (City of Durham) (Lab)]

What discussions she has had with her international counterparts on requiring private creditors to cancel debt owed by developing countries during the covid-19 pandemic.

[Kim Johnson (Liverpool, Riverside) (Lab)]

What discussions she has had with her international counterparts on requiring private creditors to cancel debt owed by developing countries during the covid-19 pandemic.

[The Parliamentary Under-Secretary of State for International Development (James Duddridge)]

The UK, the G20 and the Paris Club will suspend debt repayments from the poorest countries due this year. My right hon. Friend the Chancellor of the Exchequer and his G20 counterparts have called on private sector creditors to do likewise. At the World Bank spring forum, my right hon. Friend the Secretary of State for International Development amplified that call, along with other World Bank governors.

--- Later in debate ---

[James Duddridge]

I thank the hon. Lady for recognising the work that has already been done on suspension and relief. That will perhaps be looked at again, in terms of private sector relief and expanding either the data or the amounts of both those schemes, before looking at cancellation issues, which will have a longer-term impact. We need to focus on solutions that will help immediately and leave longer-term solutions for the longer term, but that is still very much on the table. I would not want to leave the House with the impression the World Bank is doing nothing. The international development banks overall are putting $200 billion into developing countries over the next 15 months as a result of the covid crisis.

[Kim Johnson]

Have a wonderful birthday, Mr Speaker. The coronavirus is having a significant impact on developing countries. The economic impact of the crisis is very severe. Poor countries face a debt crisis unlike anything we have seen. Their finances have been decimated by the global crisis, with private creditors exploiting the debt. The commitments made by the G20 at the spring meetings were a great start in reducing countries’ debt burdens. However, does the Minister agree that suspension is not enough and that it will lead to a further debt crisis in two years’ time? Does he agree that what countries urgently need now from the G20 is the cancellation of debt payments?

[James Duddridge]

The hon. Lady is right that suspension on its own is not an adequate response, but it was the right response to make immediately. She mentions the private sector. The Institute of International Finance is already working with the 450 main private sector lenders and put in place the terms of reference 10 days ago. The private sector, far from being abusive, can join that debt suspension. There will be a case potentially for extending that period and extending relief more generally, and we will continue our discussions with Her Majesty’s Treasury on that. Ultimately, for some countries, cancellation may be an option, but we have to remember that 50% of countries were struggling even before covid.