The British Government took action today to prevent creditors from exploiting the poorest countries in the world through the UK courts.
New legislation was passed this afternoon to make The Debt Relief (Developing Countries) Act 2010 permanent. The Act could save poor countries an estimated £145m over six years.
The legislation will stop creditors, including so-called ‘vulture funds’, from using the UK courts to extract harsh and inequitable payments from poor countries for debts that the companies may in some cases have bought for a fraction of the cost.
International Development Secretary, Andrew Mitchell said:
Giving debt relief to poor countries allows them to spend more on schools, hospitals and other vital services necessary to boost growth and reduce poverty.
It is important that other nations now follow our lead and look at what they can do to address this issue.
Speaking after the legislation was passed, Danny Alexander, the Chief Secretary to the Treasury said:
Today the Government has acted to stop the unjust actions of a few unscrupulous companies having a huge impact upon the futures of some of the poorest countries in the world.
This act will make sure that vulture funds will never again be able to exploit the poorest countries in the world within the UK’s courts.
The original Debt Relief (Developing Countries) Act 2010 was passed in April 2010, temporarily restricting the actions of vulture funds in the UK. This act had a sunset clause meaning that it was due to expire on 7 June. To prevent vulture funds returning to the UK, the Government has passed legislation to make the law permanent.
For more information and press enquiries, visit the HM Treasury website.