Friday 19 October 2012
Guernsey's States of Deliberation is to consider a States Report proposing legislation that would prevent "vulture funds" using Guernsey courts to chase the debts of heavily indebted poor countries.
The Heavily Indebted Poor Countries (HIPC) Initiative was launched in 1996, and aims to ensure that no poor country faces a debt burden that it cannot manage. Since its launch, responsible members of the international financial community have worked together to reduce to sustainable levels the external debt burdens of the most heavily indebted poor countries.
Despite the HIPC Initiative, some commercial organisations have established "vulture funds" designed to acquire the full historic debt plus accumulated interest of heavily indebted poor countries and enforce those debts in courts around the world. This has the effect of diverting resources provided through debt relief which are intended to support development and poverty reduction into meeting historic debts.
Guernsey's Chief Minister, Deputy Peter Harwood commented:
"Whilst we are not aware that Guernsey has ever had a case of a vulture fund pursuing a debt against a Heavily Indebted Poor Country through its courts, we have always said that we are strongly committed to preventing vulture funds bringing such a claim here. If the States supports this proposal, that commitment will be enshrined in our law. We will firmly close the door on vulture funds.
"Through last year's Policy Council consultation, Guernsey's people, businesses and the States have shown that they support the HIPC Initiative and oppose vulture funds. I am pleased we have an opportunity to underline that.
"As an international finance centre, and as a responsible member of the global community, Guernsey takes its international responsibilities seriously. Legislating to prevent claims by vulture funds being enforceable in our courts is a clear demonstration of that."
If the States supports the proposal, the legislation will follow the principles of the UK's Debt Relief (Developing Countries) Act 2010. This limits the amount that can be recovered by creditors, commercial or otherwise, from HIPCs to a level set out by the HIPC Initiative - 150% of the value of a country's annual exports, which is considered to be a sustainable level.
-Ends-
The relevant Policy Council States Report 'Heavily Indebted Poor Countries Initiative' is set out in Billet d'État XXIII (2012)
Issued by: Philip Henderson
Tel: 01481 717131
E-mail: pressroom@gov.gg
