Question to the HM Treasury:

To ask the Chancellor of the Exchequer, if she will amend the Debt Relief Act (Developing Countries) 2010 to include all (a) current and (b) future qualifying debts.

The Government is committed to policies that tackle unsustainable debt. We progress this work through international fora and mechanisms, including the G20, Paris Club, the Global Sovereign Debt Roundtable, and the G20 Common Framework. For example, at the G20 Finance Ministers meetings last month, the Chancellor called for reforms to the international financial architecture, including improvements to debt sustainability frameworks.

For UK lending, UK Export Finance (the UK government’s export credit agency) is committed to ensuring its lending meets international standards of sustainable finance. In line with the UK's commitment to the OECD's sustainable lending practices, the UK considers debt sustainability when providing financing, particularly in cases of lending to countries deemed at high risk of debt distress. In such cases, the UK only supports projects in line with limits set by the IMF and World Bank.

The UK is also engaging with the IMF’s Review of the Debt Sustainability Analysis for Low-Income Countries, and pushing for more detailed analysis of shocks, a better reflection of risks, and greater incorporation of climate factors.

Where required, the UK Government is committed to working with other creditors to address debt challenges in a timely and coordinated way, providing swift debt treatments. The government seeks to build consensus with other official creditors on debt treatments that return countries to moderate risk of debt distress, in line with the IMF and World Bank Debt Sustainability Analyses.

We work closely with the private sector on several aspects of their participation in debt treatments – including to help ensure timely and comparable treatments – through bilateral meetings, engagement with representative institutions, and the Paris Club’s regular discussions with the private sector.

One of the key challenges in restructurings is the complexity of non-bonded debt. These can slow the progress of restructurings as debtor countries need to negotiate restructurings bilaterally with each of the non-bonded creditors. To this end, the Chancellor launched the London Coalition for Sustainable Sovereign Debt, which will work to improve coordination to speed up these negotiations processes, alongside promoting the uptake of UK-led contractual innovations – namely, Climate Resilient Debt Clauses and Majority Voting Provisions – in private lending.

The Government is not currently pursuing legislative changes to enhance private sector participation in debt restructurings for low-income countries or amend the timeframes. The UK, alongside the G20 and Paris Club, expects private creditors to participate in debt restructurings on comparable terms and we have seen bondholders’ willingness to engage and provide debt treatments where needed, including for Zambia and Ghana. The Government does, however, keep this under review.