Written Evidence submitted to the International Development Committee inquiry into Debt Relief in low-income countries June 2022
Written evidence submitted by CAFOD to the International Development Committee inquiry into debt relief in low-income countries.
The International Development Committee Inquiry into debt relief in low-income countries is looking specifically at the impact of high levels of debt on development and the tools and strategies employed to reduce the debt burden. This inquiry will focus on the tools the UK government uses or could use to help bring debt levels in low-income countries down to more sustainable levels.
The inquiry aims to cover the following terms of reference:
The current debt levels in low-income countries;
The impact on development of high levels of debt – including the ability of countries to respond to climate change and the pandemic;
An examination of where low-income debt is concentrated, and who holds the debt;
Lessons learned from previous debt-relief initiatives such as the Highly Indebted Poor County (HIPC) Initiative, Multi-lateral Debt Relief Initiative (MDRI) and Debt Service Suspension Initiative (DSSI);
How the pandemic has impacted debt levels, and the implications of the Debt Service Suspension Initiative closing at the end of 2021;
The implementation of the Common Framework for Debt Treatment;
The relative merits of debt cancellations compared with debt relief;
The criteria used to determine eligibility for debt relief schemes, and whether this should be expanded to, for example, middle income countries;
What role the UK Government could and should play in low-income debt relief – both through bilateral and multi-lateral initiatives; and
The role of the private sector in low-income debt relief, the role of the City of London and UK financial system, and how private debt holders can be incentivised to participate in debt relief programmes.