Low and Middle-income Countries: Debt Restructuring

Lord Alton of Liverpool Excerpts

Tuesday 12th March 2024 Lords Chamber

[Lord Cameron of Chipping Norton (Con)]

Obviously, I remember fondly when we were working together in passing the Act to which the noble Lord refers. When that Act was passed there was a real problem with vulture funds acting as hold-outs in debt reconstructions. While there are still arguments for the approach he is taking, we have to ask: will it affect the cost of capital for poorer countries to borrow, will it affect the availability of capital and, crucially, now that we have the collective action clauses and the majority voting provisions, is it still necessary to have this sort of legislation? The IMF reviewed this in 2020 and concluded that things were working well, so there is a concern in my mind that the approach he is talking about is perhaps relevant to what was happening in the past rather than relevant to what is happening now. I think we should keep an open mind on it.

[Lord Alton of Liverpool (CB)]

My Lords, with more than $1 trillion owed in debt by 150 countries to China through belt and road, making it the biggest debt collector in the world, what assessment has the Foreign Secretary made of the implications on dependency, including the extension of China’s military presence in the world? In this 75th anniversary year of the Commonwealth, is he not particularly concerned about the way in which the CCP has been marching into that void, not least as a result of the cuts we have made to our overseas aid and development programme?

[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.