EXECUTIVE SUMMARY

1. We list in summary form below the most important conclusions and recommendations of the Committee arising out of its inquiry into Debt Relief. A full summary is included at the end of the Report.

Principles

A.  Unsustainable debt is often discussed only in terms of its economic implications. We agree, however, with the Chancellor of the Exchequer that "debt relief is a moral issue", rather than simply an issue of economic development, and we recommend that it be discussed in this context.

B.    Jubilee 2000 Coalition claim that "if Africa's export prices had kept pace with import prices since 1980, Africa could have repaid all its debt one and a half times over". This point is too often forgotten in any discussion on debt relief.

C.    It is clear that responsibility for unsustainable debt lies with creditors, debtors, the impact of unforeseen economic circumstance and conflict. Creditors and debtors must now work together to achieve a joint solution, with each recognising their own role in the creation of the problem and their potential contribution to its solution.

Export Credits

D.  We recommend that there be an international agreement to end the use of export credits for "unproductive expenditure", such as unjustifiable expenditure on arms.

The Heavily Indebted Poor Countries (HIPC) Initiative

E.    We welcome the Heavily Indebted Poor Countries Initiative to reduce the burden of unsustainable multilateral debt. It remains, however, slow and inadequate. In particular we recommend that -

(i)  the cut-off date for debt relief be moved from the time of the approach of the debtor country to the Paris Club, to the time of agreement on exit ratios and the timing of relief.

(ii)  calculations of sustainability should include liabilities other than external debt, in particular domestic debt

(iii)  the requirement of a six-year track record before the receipt of relief is too long and should be reduced to three years at most

(iv)  any conditionality on the provision of debt relief requires the inclusion of targets in the health and education sectors

Transparency

F.    The secrecy surrounding the Heavily Indebted Poor Countries Initiative negotiation process has led to many of its weaknesses. We recommend -

(i)  the publication of calculations of debt sustainability

(ii)  the publication of the IMF Policy Framework Papers and related annual programmes, and of World Bank Country Assistance Strategies, so that structural adjustment programmes can be properly evaluated

(iii)  a stronger debtor voice at the negotiating table and assistance to debtor countries to enable them to become fully involved in the negotiating process

Rwanda

G.  The international community failed to act when the genocide took place in Rwanda in 1994. It now has a responsibility to do everything possible to prevent such events recurring. Debt relief can make a significant contribution. In particular, we recommend that -

(i)  multilateral debt relief for Rwanda be implemented as rapidly as possible

(ii)  the Government urge all bilateral creditors, in particular France, to cancel debt incurred by the previous regime

(iii)  reforms already undertaken in Rwanda since 1994 be taken into account in decisions concerning the time frame of debt relief

(iv)  the Government contribute to the US $60 million needed to service Rwanda's debts during the first stage of the Heavily Indebted Poor Countries Initiative negotiation process

Bilateral Debt

H.  Recent difficulties in sharing the burden of debt between multilateral and bilateral creditors are unacceptable and delay desperately needed relief. We recommend the revision of Paris Club rules to allow bilateral debt to be reduced to a level sustainable for debtor countries on a case by case basis, rather than to a fixed percentage of debt stock.