Ivor Callely
Question:246 Mr. Callely asked the Minister for Finance the World Bank and International Monetary Fund policy to tackle the debt burdens of developing countries; and if he will make a statement on the matter. [23404/98]
Vol. 496 No. 6
246 Mr. Callely asked the Minister for Finance the World Bank and International Monetary Fund policy to tackle the debt burdens of developing countries; and if he will make a statement on the matter. [23404/98]
The principal instrument operated by the World Bank and IMF for alleviating the burden of third world debt is the Heavily Indebted Poor Countries (HIPC) Initiative.
The aim of the initiative is to ensure that the Heavily Indebted Poor Countries which demonstrate a track record of sustained strong policy performance, are able to strengthen their poverty reduction programmes and permanently exit from future debt reschedulings.
This initiative was endorsed by the bank and the fund in September 1996. The initiative was designed to reduce the burden of debt for these countries to sustainable levels. Those institutions to whom the debt was owed would be called on to make proportionate contributions to reducing the burden of servicing the debt. The initiative called for participation by sovereign bilateral creditors as well as the multilateral creditor institutions. While it was open to bilateral creditors to contribute through debt forgiveness or rescheduling, the multilateral institutions would contribute mainly through financing debt service either from their own resources or through the contributions of their members, rather than through rescheduling.
Nine countries have so far reached a decision point on debt sustainability. Of these, two were judged not to need assistance, and the remaining seven require assistance totalling about $6.1 billion in nominal debt service relief. The objective is to have all those countries which are likely to need relief in the process by the year 2000. Ireland has welcomed the initiative and supported efforts to make it more flexible and inclusive, particularly in relation to adequate account being taken of countries efforts to implement programmes and also of social as opposed to economic and financial criteria for qualifying for relief.
Earlier inclusion of countries or increasing the extent of relief will increase the cost of the initiative. The focus in Washington was to ensure that adequate funding was in place to implement the initiative and that those countries which could benefit from it has appropriate programmes in place by the year 2000.