- UK Government publishes more data on its loans to other countries and commits to updating it every 3 months.
- They are the first G20 country to make their lending more transparent.
- This is an important step forward on debt transparency, but more is needed to engage private creditors.
Last week, UK Export Finance, the UK government’s main lending agency, adopted a more transparent approach to publishing data on its lending to other governments with a commitment to update it every 3 months.
This is great progress made by the UK and marks a significant improvement in the UK government’s lending transparency.
These updates bring the government in line with the Operational Guidelines for Sustainable Financing which were agreed by the G20 in 2017, and in part aim to encourage greater information sharing and transparency between borrowers, creditors, and international financial institutions.
The UK is the first country to publish additional data in line with the guidelines, setting a higher standard in debt transparency amongst G20 lenders.
We might now expect to see other G20 countries follow the UK Government’s lead, which would signal much needed progress on the transparency of G20 Governments’ loan making.
While this is a welcome step forward by the UK Government, more action is required to improve loan making transparency, especially on loans by private creditors.
The OECD launched last week a public registry for member banks of the Institute of International Finance (IIF) to disclose details of their loans to low- and middle-income countries. While this again is a positive step, the platform does not capture all private loan-making institutions and we understand that participation in the repository is expected to be voluntary – meaning that there is nothing compelling private creditors to participate.
One solution would be to introduce legislation requiring private lenders to publicly disclose loans on the registry, in order for the loan contracts to be legally enforceable.
The UK Government is a key jurisdiction to implement such legislation given that a high proportion of developing country external debt is governed under UK law. The UK Presidency of the G7 this year is a perfect opportunity to take action on private creditor transparency by introducing legislation compelling their participation in loan disclosure.
The published data is available here. It shows two existing loans to low- and middle-income countries, Ghana and Iraq.