Michael P. Kitt
Question:77 Mr. M. Kitt asked the Minister for Finance the steps, if any, he will take to ensure that the IMF develops a comprehensive debt relief framework as proposed by the Government in relation to debt relief. [20114/96]
Written Answers. - IMF Debt Relief Framework.
A decision was taken at the IMF/World Bank annual meetings in October 1996 to proceed with The Heavily Indebted Poor Countries (HIPC) Debt Initiative — A Programme of Action.
The debt initiative will take almost immediate effect with beneficiary countries participating before the end of 1996. A preliminary review of experience with the operation of the Debt Initiative will be held at the spring 1997 meetings of the IMF and World Bank.
The joint IMF/World Bank initiative must be regarded as a significant success for both organisations and a tribute to the tenacity and negotiating skills of the managing director of the IMF and the president of the World Bank. It also manifests the outcome of a considerable and complex process of negotiation in which most parties to the dialogue have had to compromise.
The Initiative is significant for a number of reasons: it is directed at HIPCs who are demonstrating a track record of sustained strong policy performance (economic adjustment) and who are capable of achieving overall external debt sustainability in the medium term; the initiative commits the international financial community to take additional action to reduce the debt burden of the HIPCs where existing mechanisms are unlikely to be effective; coordinated action by all creditors is envisaged and central to the success of the initiative; the initiative will be implemented flexibly, on a case-by-case basis and with full participation by debtor governments; the IMF is actively participating in the Initiative; the World Bank has committed an initial contribution of US$500 to the Initiative with an indication of a willingness to contribute more in later years if World Bank resources permit; the Paris Club (bilateral lenders) have agreed to an 80 per cent stock of debt reduction; other multilateral agencies are also being asked to define their participation.
I am satisfied that the debt initiative represents a significant step forward in the manner in which the problems of the poorest and most heavily indebted countries can be dealt with by the bilateral and multilateral lending institutions.