Tackling Unsustainable Debt

Baroness Brown of Silvertown Excerpts

Thursday 17th July 2025 Lords Chamber

Asked by

[Baroness Brown of Silvertown]

To ask His Majesty’s Government what progress they have made towards tackling unsustainable debt in cooperation with partners in the global South, as set out in the Labour Party Manifesto 2024.

[The Financial Secretary to the Treasury (Lord Livermore) (Lab)]

My Lords, as set out in our manifesto, tackling unsustainable debt in low-income countries is a key development priority for this Government. We are working closely with partners to strengthen and speed up the G20 common framework to enhance debt transparency for debtor and creditors. We have set up the new London Coalition on Sustainable Sovereign Debt, co-chaired by my honourable friend the Economic Secretary, to promote contractual innovations for increased resilience and to make restructurings quicker.

[Baroness Brown of Silvertown (Lab)]

My Lords, the UK High Court has ordered South Sudan, one of the world’s poorest countries, to pay $657 million in debt servicing to a for-profit bank. That is half its annual income. Surely we have the power and moral responsibility to prevent this happening. The previous Government passed Andrew Gwynne’s debt relief Act, so will this Government consider introducing an updated law to support millions of people in debt-distressed countries?

[Lord Livermore (Lab)]

I am very grateful to my noble friend for her question and I pay tribute to her considerable expertise on these issues; I know she served as shadow Minister for Africa for several years. The Government fully agree that private creditors must play their part in debt restructurings. The Paris Club and now the G20, as part of its commitment to co-ordinate on debt treatments under the common framework, are clear on our collective expectation that private creditors must participate in restructurings on terms at least as favourable as those provided by official creditors. Overall, we have seen evidence of private creditors’ willingness to engage and provide debt treatments where needed.

While the Government appreciate the intentions of those proposing legislation in this area, we are concerned about the potential negative impacts that such legislation could have, specifically on the cost of finance for developing countries. As such, the UK is not currently pursuing legislation, given the existing lack of evidence to justify such an approach and the potentially adverse wider consequences. We will, of course, continue to keep the evidence and our position under review.

My noble friend specifically mentioned South Sudan. As I understand the complex situation with Afreximbank—an African financial institution based in Cairo—South Sudan is not undergoing a multilateral restructuring with official creditors, so it is not clear that legislation would improve that situation.