I move "That the Bill be now read a Second Time".
The purpose of the Bill is to authorise a voluntary contribution of £6,230,000 by the Irish Government to the sixth replenishment of the resources of the International Development Association.
The association was established in 1960 to help finance development projects and programmes in the poorest developing countries. It is one of the organisations that make up the World Bank Group, the others being the World Bank itself and the International Finance Corporation. Membership of the World Bank is a prerequisite for membership of the association. Day-to-day management of the association is handled by its management and staff, under the President of the Bank Group, Mr. Robert McNamara. The management report to an executive board of 20 directors elected by the bank's member countries. Policy matters are decided by the board of governors of the association which consists of one governor for each member country. The association has 122 member countries at present.
As the association's resources are limited, relative to the needs of its less well-off member countries, priority is given to the very poorest countries. Thus, nearly 90 per cent of the association's lending goes to countries where large sections of the population have per capita incomes of, on average, £100 a year. In some of the countries per capita income would be less than half this amount. The association helps by financing projects aimed at raising agricultural output and also by supporting investment in roads, telecommunications, water supply and other infrastructural improvements that are essential to economic growth. The association's loans are on highly concessional conditions—50-year repayment periods, no repayments for the first ten years and no interest charges. The projects financed by the association must, of course, be economically and financially viable and must meet the same standards as those required by the World Bank itself. Unlike loans given by the association, lending by the World Bank is essentially on commercial terms and the International Finance Corporation also provides equity and loan finance on an essentially commercial basis.
The International Development Association obtains its financial resources in a number of ways. The principal method is through periodic replenishments provided by its richer member countries, also known as Part I countries. The other member countries are known as Part II members and a number of these also participate in the replenishments. The resources made available to the association to date comprise, in round figures, initial membership subscriptions amounting to $1 billion, transfers from the surplus income of the World Bank of $1½ billion, and replenishments of nearly $18½ billion.
Ireland joined the association on its foundation in 1960, and subscribed $3 million to the initial capital. This country did not contribute to the first or second of the three-yearly replenishments of resources, but made a contribution of $4 million to the third replenishment. Ireland was still a Part II member at that time. Ireland became a Part II member in 1973, because of the economic progress which had been made over the previous decade, and because of our membership of the EEC. All the other EEC members, and most OECD member countries, hold Part I status. It was accepted that this would involve a continuing commitment to contribute towards the financing of the association. As a Part I member, Ireland contributed £3.1 million to the fourth replenishment and £5.8 million to the fifth replenishment.
Negotiations on the current replenishment—the sixth replenishment—began at the end of 1978 and concluded towards the end of last year. The negotiations agreed on an overall amount of £12 billion for the replenishment. This represents an increase of 55 per cent in US dollar terms over the amount of the fifth replenishment. The vast bulk of the funds will be provided by Part I countries. The basic principle adopted in the allocation of contributions among these countries was that each would maintain in this replenishment the same share as it had taken in the fifth replenishment, with a number of exceptions in the case of some major contributors. The allocations have been made on the understanding that commitments to them are not final until approval has, where necessary, been obtained from the legislature of each donor country. The outcome of the sixth replenishment negotiations has recently been approved by the association's board of governors. The replenishment will enter into force when member countries contributing 80 per cent of the total replenishment formally notify the association that they will pay their allocated amounts.
As for previous replenishments, donor countries have the right initially to substitute non-negotiable, non-interest-bearing demand notes for cash payments. The notes, denominated in the member's currency, are to be deposited over the three years 1980 to 1982. Actual cash payments under the replenishment will arise over the years 1981 to 1990. The precise rate at which the funds are called upon will depend on the progress made in implementing the projects financed by the replenishment.
As a Part I member of the association, Ireland is, as I have said earlier, expected to contribute to the periodic replenishments. In accordance with the sharing arrangements agreed in the negotiations the Government have indicated that, subject to legislative approval, they are prepared to contribute the amount appropriate to Ireland, that is £6,230,000. The contribution will count as part of our official development assistance.
Ireland's membership of the association is covered by the International Development Association Act, 1960. As in the case of earlier replenishments the Bill now before the House makes provision, by way of amendment to the 1960 Act, for our contribution to the latest replenishment. The proposed amendment also brings together the earlier payments provisions in the 1960 Act and those inserted by the subsequent amending Acts.
This Bill, when enacted, will, therefore, enable Ireland to maintain its role in helping to finance the work of the International Development Association and, through it, to continue to assist some of the poorest developing countries around the world.
I recommend the Bill for the approval of the House.
