Select Committee on European Communities Report


A. GENERAL POLICY QUESTIONS

1.  SUPPORT FOR STRUCTURAL ADJUSTMENT AND DEBT RELIEF IN HEAVILY INDEBTED ACP STATES: A COMMUNITY RESPONSE TO THE HIPC DEBT INITIATIVE (7158/97)

Letter from Helen Liddell MP, Economic Secretary to the Treasury, to Lord Tordoff, Chairman of the Committee

  Your letter to me of 3 July[1] responding to my Explanatory Memorandum of 22 May on the above document asked that the Committee be kept informed of developments. I am pleased to tell you that, after intense negotiations at working group level on the financing of the initiative, a compromise package of proposals has been found, which will, I believe, be acceptable to all Member States. The proposal requires unanimity.

  The compromise package:

    (i)  confirms that the Community will participate in the initiative;

    (ii)  proposes that 40 mecu of EDF interest currently available, and possible further interest which accrues, should be used for financing the contribution for those ACP countries in most immediate need;

    (iii)  allows for the use of reflows, if the interest amount is not sufficient, pending availability of further resources (eg EDF VII), not yet on stream;

    (iv)  instructs the Commission to put forward in good time in 1998 a report to the Council on financing needs for the initiative in future, on the basis of which the Council will take a decision on subsequent contributions; and

    (v)  invites the EIB to examine the possibility of participation on its own resources loans (we understand that the Bank will respond positively).

  We would have preferred not to include the possibility of using reflows since, in the case of the United Kingdom, they are used for the aid programme. However, the Commission (and some Member States) see it as a necessary contingency provision to ensure the financing of the HIPC initiative. But this is only one aspect of the overall package and we should not hold up agreement because of it. Its practical impact is likely to be minimal, and the Commission has come a long way in our direction to try to secure agreement. Moreover, we want to see Community participation in the HIPC initiative. In the light of this, I am satisfied that these current proposals, taken together, are acceptable and that we should agree to them. I hope that your Committee will find the proposals acceptable too, and that, consequently, you will be able to lift the scrutiny reserve which currently applies to Commission document 7158/97.

7 January 1998

Letter from Lord Tordoff, Chairman of the Committee to Helen Liddell MP, Economic Secretary to the Treasury

  Thank you for your letter of 7 January telling us of the outcome of the negotiations.

  In the light of your letter we can now lift the scrutiny reserve.

27 January 1998


1   Printed in Correspondence with Ministers, 11th Report, Session 1997-98, p21. Back


 
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