5. Hasn't the UK cancelled all debts?No! The UK has cancelled many debts, and been active in calling for further cancellation for the poorest – but it still holds billions in debts from other poor countries. The UK cancels all debts from countries that finish the Heavily Indebted Poor Countries (HIPC) scheme – this covers 30 countries so far, and could eventually cover at least 10 more. Additionally, the UK has cancelled all ‘aid debts’: that is, resulting from old aid money that was given in the form of loans to the poorest countries. This basically means they stopped asking the poorest countries to repay their aid! It also cancels debts for some Commonwealth countries that don’t qualify as among the ‘poorest’ countries – in practice, this mostly means countries in the Caribbean.
As well as cancelling debts, the UK offers some ‘debt relief’, which means reducing or temporarily suspending debt payments from some countries. Any debt service paid to the UK by countries that are eligible for HIPC but haven’t yet finished the scheme, is put into a separate trust and returned when they complete HIPC. Also, the UK is offering to pay its ‘share’ (judged as 10%) of the debt payments that up to 27 poor countries outside HIPC are making to the World Bank and some other multilateral lenders. In practice, this is only covering six countries at the moment: Armenia, Cape Verde, Georgia, Mongolia, Sri Lanka and Vietnam.
However, the UK still holds more than £2 billion of debt from other poor countries which are NOT eligible for HIPC. This includes countries like Angola, Kenya, Pakistan, Peru and Ecuador, which desperately need to invest in basic services for their people, but which are still making debt payments to the UK. All this debt must be cancelled.
<< Previous | Back to questions | Next >>