Campaigners working to cancel debt in the developing world have today welcomed the publishing of the Debt Relief (Developing Countries) Bill.
Nearly 200 MPs are backing Andrew Gwynne’s Private Member’s Bill, which is set to restrict the activities of 'vulture funds'.
Vulture funds are companies that seek to profit by buying distressed debt belonging to companies or countries on the secondary market at a steep discount, then seeking to make a profit by claiming back the original debt and more.
The Bill, which aims to protect the poorest 40 countries in the world who qualify for international debt relief through the Highly Indebted Poor Countries (HIPC) initiative, is due to have its Second Reading this Friday (26 February).
HIPC gives debt relief to countries on their historic debts and the Bill will seek to make sure that creditors cannot pursue payment beyond the level assessed as sustainable by the IMF and World Bank. The Bill also provides an incentive for debtor countries to co-operate in settling these debts on terms consistent with the initiative.
Andrew Gwynne MP said: “The bill will represent a major step forward in tackling these funds. It cannot be right that companies are allowed, in British courts, to make profits out of the world's poorest people. In some of the very poorest countries almost half the population lives on just under a dollar a day.
“I propose to heavily restrict the actions of creditors that do not participate in debt relief, dealing with the so-called 'Vulture Funds.' For too long, some companies have been allowed to get away with exploiting the debt relief received by developing countries for their own profit; taking vital resources away from those that need it most. Through my Private Members Bill I aim to put a stop to it.”
The Labour MP Sally Keeble, who is co-sponsoring the Bill, also introduced a Ten Minute Rule Bill on the issue in May 2009, which suggested capping the amount that Vulture Funds could claim against developing countries. She said: "This is an important bill that will help protect funds destined to provide services for some of the poorest people in the world. It will also protect the interests of British taxpayers who provide money for debt relief, only to find that some gets creamed off into these secretive funds.”
The Government has indicated that it will be supporting the Bill, following a consultation at the end of last year.
Ian Pearson MP, Economic Secretary to the Treasury said: “The UK and many others, including commercial creditors, participate in debt relief. It is vital that we make sure that heavily indebted poor countries see the full benefit of the debt relief that they are entitled to. Today the Government is publishing a response to our consultation on the issue and an Impact Assessment to support the Bill. I hope that next week MPs from all parties can bring this measure a step closer to becoming law.”