The Government recognises the need for debt restructuring processes where a country can no longer afford to repay its debts. This is why for many years we have been at the forefront of international efforts to promote debt sustainability.
At home, Ministers introduced the Debt Relief (Developing Countries) Act, a targeted piece of legislation with a specific aim to support Heavily Indebted Poor Countries (HIPCs) to receive debt relief from all their creditors. The Government welcomes the support of the UK’s Crown Dependencies in introducing similar legislation and will continue to share its experience of addressing non-participation on debt relief internationally.
Internationally, the IMF/World Bank Debt Sustainability Framework, OECD lending principles covering official export credits, and the provision of debt relief to the world’s poorest country through the HIPC Initiative all have the Government’s ongoing support. Ministers will also support future international agreements that fully work through these complex issues. Implementing an effective mechanism requires widespread international support on the side of both the creditors and debtors.
The Government remains committed to addressing the issue of “vulture fund” activity in developing countries. “Vulture fund” activity prevents some of the world’s poorest countries getting the amount of debt relief they need to deliver poverty reduction and means money intended for debt relief is indirectly diverted for the benefit of those commercial creditors. Britain continues to actively engage in ongoing discussions to improve the operation of sovereign debt restructurings including supporting the International Monetary Fund’s work that has proposed new measures to reduce the power of holdout creditors in future debt restructurings.
By Patrick McLoughlin on October 15, 2015