Developing World: Debt Reduction

Lord Alton of Liverpool Excerpts

Tuesday 13th February 2024 Lords Chamber

[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.

[Lord Alton of Liverpool (CB)]

Will the Foreign Secretary confirm that, through China’s belt and road programme, developing nations are estimated to be indebted to China to the tune of more than $1 trillion? Does he share the view of Parliament’s Intelligence and Security Committee that it would be naive not to see how such punitive debt in countries such as Sri Lanka—which is $47 billion dollars in debt, half to China—can be used by China to buy support in the UN, to expand its military presence and for leverage in domestic and international institutions? How are we countering this?

[Lord Cameron of Chipping Norton (Con)]

One of the most important ways to counter it is by offering an alternative, so that when countries are developing there are other offers on the table. That is why the expansion of British International Investment—what used to be the Commonwealth Development Corporation—is so important. We are also countering it through the expansion of the multilateral development banks, and in our White Paper we demonstrate how we can expand their balance sheets and get them to lend more. However, the noble Lord makes a very good point: if we look back 10, 15 or 20 years, when we were running debt forgiveness programmes to help highly indebted countries, we see that it was mostly Paris Club countries such as France, Germany, Britain and America that were responsible for the debt, so if we wanted to write it off then we could. Now that so much of the debt owed is to China, which does not believe in debt write-offs, we have to find other ways of delivering restructurings to help those countries which have got into trouble.