Dear Constituent,
Thank you for contacting me about loans to developing countries.
The UK continues to be at the forefront of international efforts to promote responsible lending and borrowing practices. This includes ongoing support for the IMF-World Bank Debt Sustainability Framework and OECD lending principles covering official export credits.
The UK also supports the African Legal Support Facility, which provides legal advice to countries facing litigation, and the World Bank’s Debt Reduction Facility (DRF), which enables countries to buy back their commercial debt at a deep discount with donor backing. Since its inception, the DRF has played a significant role in extinguishing commercial external debt from the books of the public sector of low-income countries.
The UK government is committed to ensuring that private sector creditors participate in debt restructurings when necessary. When undertaking a debt restructuring, a key principle for the UK and other Paris Club members is ‘Comparability of Treatment’. This requires all bilateral and commercial creditors to participate in a debt reorganisation arrangement on terms comparable to those of the Paris Club.
Ultimately, the regulation of UK banks is a matter for the independent Financial Conduct Authority (FCA). The FCA has robust powers to investigate potential cases of misconduct and to enforce UK financial rules; this includes any issues around the lending practices of UK financial firms operating overseas.
I hope the above is helpful to clarify the action the UK can and does take to promote responsible lending and borrowing practices.
Thank you again for taking the time to contact me.
Sincerely,
