Supplementary Memorandum from Mr. Robin Fellgett, Deputy
Director, Head of Financial Regulation, HM Treasury
During the session of the International Development Committee's
inquiry into international debt issues on 17 February, at which
I led the officials' team, certain further information was promised.
I set this out below.
2. I stated that I would verify what percentage of the total
debt owed by the Heavily Indebted Poor Countries (HIPCs), (not
including Liberia, Nigeria, Somalia, and Sudan for which figures
are not known), is owed to bilateral creditors, and what percentage
is owed to multilateral creditors. The exact split is that, on
end 1995 figures, 54 per cent of the long-term debt held by the
37 relevant HIPCs is owned to bilateral official creditors, 31
per cent is owed to multilateral creditors and 15 per cent is
owed to private creditors. However, as I cautioned, all figures
of this nature need to be treated with care.
3. Mr Richard Manning promised to provide information on
both the DFID aid programme to HIPCs and the Cahora Bassa Dam
project in Mozambique. He has asked me to pass on the following.
THE DFID AID
PROGRAMME TO
HIPCS
4. In FY 1996-97, the last year for which information is
available, DFID (ODA then) provided £264 million of bilateral
aid to HIPCs (not including CDC investments or non-aid debt relief).
As Mr Manning noted at the time, the transfer represented several
times the amount of repayments received by ECGD (Mr Steele told
the Committee that ECGD received about $60 million a year from
HIPCs).
CAHORA BASSA,
MOZAMBIQUE
5. DFID confirm Mr Manning's statement that no DFID (or CDC)
money has gone into the operation of the Cahora Bassa dam. The
EC (through the European Investment Bank and the European Development
Fund) have contributed to the rehabilitation of the transmission
lines. The Committee may be interested to know that the dam is
operated by a company which is owned 80:20 by the Portuguese and
Mozambican governments. The huge debt on the project (estimated
to be around $3 billion) is owed by these governments to (mainly
Portuguese) commercial banks, and being private debt not guaranteed
by the Government of Mozambique, falls outside the scope of the
HIPC initiative.
6. Andrew Steele promised to give details of defence related
sales to Tanzania, Burkina Faso and Kenya. He has asked me to
explain the separate sales were as follows:
3 HS 748 series 2a aircraft—I understand that these
are 50-60 seat turbo prop passenger aircraft and probably would
have been used for carrying troops or could be converted to a
VIP aircraft;
12 Scorpion combat reconnaissance tracked fire support vehicles.
Refit of 2 fast patrol craft;
12 Tucano trainer aircraft. I understand that these are not
combat aircraft but generally used for reconnaissance, patrolling
borders, coastlines, etc.
7. Mr Steele also promised further information on representations
made by the Government of Antigua, suggesting that "a penalty
clause of 0.5 per cent above LIBOR on a daily basis on an outstanding
debt has increased the original capital lent from US$2 million
to US$5 million" (Q94). A note, prepared by ECGD, is attached
at annex 1.
Robin Fellgett
HM Treasury
10 March 1998
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