On 11th June the Bishop of Worcester, the Rt Revd John Inge, asked Her Majesty’s Government “what steps they are taking to ensure that G20 countries cancel any debt owed to them by the poorest countries”.
Baroness Penn responded to his question: My Lords, the Government are concerned by debt vulnerabilities in developing countries, which Covid-19 has amplified. The Chancellor and his G20 counterparts agreed a historic suspension of debt repayments from the world’s poorest countries. This will see official creditors provide up to $12 billion of cash-flow relief to help countries respond to the health and economic impacts of Covid-19. It also provides time to assess what further assistance these countries may need as the full economic impact becomes clearer.
The Lord Bishop of Worcester asked a follow-up question: I thank the noble Baroness the Minister for her Answer. I also take this opportunity to express appreciation to the Government for their continued commitment to paying 0.7% of GNI to official development assistance. It is a very positive step that debt has been suspended but, in view of the increasing economic and social burden of this terrible virus on the poorest countries in the world, will the Government begin to press not only for the suspension but the cancellation of debts as we go further and, indeed, encourage private debtors to do the same?
Baroness Penn: My Lords, we are in uncharted territory at the moment and the full impact of Covid on the developing world is unknown. The DSSI provides breathing space, so future restructuring of debts may be needed. The G20 has publicly called for the private sector to voluntarily participate in this initiative and, if it did so to the full extent, that would provide another $10 billion of breathing space for these countries.