Commons Sense

House of Commons · Ministers' Questions

Africa: Sovereign Debt

Tuesday 2 May 2023 · 3 questions

Summarised by AI from the official record, so it can contain mistakes.

Read the full transcript on Parliament.uk

At a glance

Answered 0 Partly answered 3 Not answered 0

Key points

  • Kate Osamor raised concerns about Somalia's debt situation, highlighting the difficulty in addressing poverty when such a high percentage of revenue is spent on debt financing.
  • The Minister acknowledged Britain's leadership in advocating for climate-resistant debt clauses to help countries like Somalia.
  • Preet Kaur Gill referenced the Minister's previous statement about the urgency of debt relief for countries in crisis, expressing concern over the use of vulture funds.

Topics (select to filter)

Questions & Answers

Q1 Kate Osamor Labour (Co-op) Edmonton and Winchmore Hill
Economy Foreign Affairs
Context

The question addresses the issue of low and middle-income African countries struggling with sovereign debt, specifically mentioning the case of Somalia where 98.9% of government revenue was spent on debt financing in 2020.

Question

What steps he is taking to help low and middle-income African countries with restructuring sovereign debt. In Somalia in 2020, a staggering 98.9% of Government revenue was spent on debt financing. Clearly, it is impossible for a state to tackle poverty in those circumstances, but the Government's most recent international development strategy largely omits debt relief.

Answer from Andrew Mitchell

The hon. Lady is quite right to raise the issue of Somalia, which is one of only three countries, I think, that has not yet received its heavily indebted poor countries settlement. She will be pleased that Britain is in the lead on the climate-resistant debt clauses, which will mean that, when a disaster strikes or when there is a specific event, countries will be able to delay all capital and interest payments for two years, which will then be added to the back end of the loan.

Partly answered

Not addressed: Commitment to prioritise debt relief in future strategy

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Q2 Kate Osamor Labour (Co-op) Edmonton and Winchmore Hill
Foreign Affairs
Context

The question refers to a previous statement by the Minister about leadership being lacking in addressing debt relief for countries like Zambia. The questioner highlights that 90% of international bonds owed by eligible countries are governed by English law.

Question

Last week, the Minister said: “A time when crises are everywhere, but leadership is not. When we can save a bank in California in three days, but Zambia waits more than two years for debt relief.” I agree. However, the Minister knows that 90% of international bonds owed by countries eligible for the common framework are governed by English law, so what leadership is he demonstrating to ensure vulture funds cannot block debt-restructuring processes by simply refusing to come to the table?

Answer from Andrew Mitchell

The hon. Lady makes a very good point. I am flattered that she has read the speech I gave at Chatham House last Thursday. We are extremely concerned about the use of vulture funds, and Britain has been the lead country in trying to clamp down on them. I assure her that we will continue with that work.

Partly answered

Not addressed: Concrete steps or timeline for addressing vulture funds blocking debt-restructuring processes

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Q3 Preet Kaur Gill Labour (Co-op) Birmingham Edgbaston
Taxation Foreign Affairs
Context

The question builds on a previous statement by the Minister about leadership being lacking in addressing debt relief for countries like Zambia. The questioner highlights that 90% of international bonds owed by eligible countries are governed by English law.

Question

Last week, the Minister said: “A time when crises are everywhere, but leadership is not. When we can save a bank in California in three days, but Zambia waits more than two years for debt relief.” I agree. However, the Minister knows that 90% of international bonds owed by countries eligible for the common framework are governed by English law, so what leadership is he demonstrating to ensure vulture funds cannot block debt-restructuring processes by simply refusing to come to the table?

Answer from Andrew Mitchell

The hon. Lady makes a very good point. I am flattered that she has read the speech I gave at Chatham House last Thursday. We are extremely concerned about the use of vulture funds, and Britain has been the lead country in trying to clamp down on them. I assure her that we will continue with that work.

Partly answered

Not addressed: Concrete steps or timeline for addressing vulture funds blocking debt-restructuring processes

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