Ensuring that debt levels are sustainable is a key part of reducing poverty. The UK remains a strong advocate for responsible lending and borrowing practices.
In line with international best practice, the UK will not provide loans to countries in debt distress or those considered at high risk. DFID's contributions to the international financial institutions also help developing countries gain access to finance below market-rates. Eligible countries can also receive debt relief under the Heavily Indebted Poor Countries (HIPC) Initiative, which DFID supports. For those that have received debt relief, DFID supports them to maintain the gains by promoting their access to debt finance from a range of sources, while ensuring long-term debt sustainability.
The UK works internationally, alongside other G20 countries, and with the likes of the International Monetary Fund and the World Bank Group, to promote debt sustainability and transparency. Ongoing work to address public debt vulnerabilities in developing countries includes engagement with borrowers to improve their debt management, and with creditors to help support better lending practices.
The G20 is also supporting industry-led work to improve monitoring and disclosure of sovereign debt in low-income countries. The Institute of International Finance, which represents many private sector creditors to sovereigns, is exploring the option of developing voluntary principles on disclosure of lending to sovereigns, particularly low-income countries. If delivered, this could be a major step in improving disclosure of lending to developing countries.
We were the first country to introduce legislation to prevent commercial creditors of HIPC's recovering an amount of debt in excess of that consistent with the HIPC initiative through its courts, and the UK continues to support international initiatives to tackle 'vulture fund' activity.