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Dáil Éireann debate -
Wednesday, 23 Apr 1997

Vol. 478 No. 2

International Development Association (Amendment) Bill, 1997: Second Stage.

I move: "That the Bill be now read a Second Time."

The purpose of this Bill is to authorise a contribution of £13 million by the Irish Government to the 11th replenishment of the resources of the International Development Association — IDA — which is an affiliate of the World Bank. It is one of the bank's main instruments in the fight against extreme poverty. It was set up in 1960 to assist the poorest countries which cannot afford to borrow money from the World Bank on its normal terms. These countries have an annual per capita income, in 1995 terms, of $905, or IR£588, or less. There is also an exception for small island economies that have limited creditworthiness.

IDA beneficiaries are the people of the world's 79 poorest countries, which have a total population of 3.3 billion. That is equal to 57 per cent of the world's population. The IDA is the world's most important source of global multilateral concessional assistance. Its activities span the globe, including China, Bangladesh, India, Pakistan, Egypt, most of sub-Saharan Africa and some countries in Central and South America. Some 41 IDA-supported countries are in sub-Saharan Africa.

Sustainable poverty reduction remains the overarching objective of the IDA and, indeed, is the overarching objective of development. Broad-based economic growth led by the private sector and environmental sustainability are two key supporting objectives of the IDA. The IDA also recognises that development requires growth accompanied by a broad-based investment in basic health, education and infrastructure. The critical underpinning requires macro-economic stability accompanied by structural adjustment and the building of civil society.

The IDA is mostly funded by regular grant contributions from its richer member countries. These resources need to be replenished from time to time, normally at three year intervals. The negotiations for the 11th replenishment were completed in 1996 and this replenishment will cover the period from June 1996 to June 1999. These funds are supplemented by repayments made by IDA's borrowers in respect of earlier loans and transfers from the available net income of the World Bank.

Deputies will be aware that the United States is contributing only to years two and three of the IDA 11. Because of this, it has been necessary for IDA to establish a one-year interim fund on an exceptional basis. The absence of the US contribution for the first year prevented the other donors from agreeing an adequate and fully burden-sharing funding basis for the full IDA 11 period.Hence the need to split the three-year period into a once-off year-long fund without US participation, followed by a two-year arrangement inclusive of US involvement.

A figure of 7.1 billion special drawing rights — SDRs — about IR£6.67 billion, will be provided in donor contributions to enable IDA to commit a total of about 14.5 billion SDRs, about IR£13.6 billion, during this period. Of the total donor contributions to IDA 11, some 2.1 billion special drawing rights, about IR£1.97 billion, will be provided to the interim fund and five billion special drawing rights, about IR£4.7 billion, will be provided for the association's operations in 1998 and 1999.

The agreement to the 11th replenishment was achieved under difficult budgetary circumstances for many of the contributing countries. It will allow the IDA to continue its activities at current levels for the next three years. This is a noteworthy achievement in itself. However, it also gives cause for concern for the longer term as it reflects a decline in donor contributions to a level below those of the 9th and 10th replenishments. During that period the Irish contribution to IDA has increased by 2 per cent in absolute terms. The Irish contribution to IDA 11 will amount to IR£13 million which is equivalent to 0.13 per cent of total donor contributions. Of the 36 donor countries, Ireland, Brazil, Luxembourg, Portugal and Switzerland increased their basic shares from that in IDA 10. Ireland's total commitment of IR£4.3 million in 1997 will be to the interim fund. The balance of the Irish commitment will amount to IR£8.7 million and will be devoted to operations in financial years 1998 and 1999.

The actual cash payments for IDA 11 will be made over a seven year period beginning in 1997. Contributions to the IDA are payable from the Central Fund. Ireland's contributions to the International Development Association count as part of our official development assistance programme, about which I will comment further at a later stage.

Apart from the critical question of the size of the replenishment, during the negotiations attention also focused on other key policy issues, such as the poverty focus of the association, the environmental impact of its projects and the problems facing low income highly indebted countries in servicing and, in some cases, redeeming their debt. To ensure IDA resources are applied effectively in the programme for a given country, the development effort is centred around what is referred to as a country assistance strategy. These strategies, which have evolved in recent years, are a more effective instrument for prioritising activities.

Poverty assessments are one of the main pieces of analytical work available as background for individual country assistance strategies. Officials and citizens of borrower countries have also been encouraged to participate in preparing the country assistance strategies and in some countries, with government consent, interested citizens and NGO representatives have been invited to discuss lessons learned from the implementation of national adjustment programmes. However, evidence from the field and from NGOs indicates that the country assistance strategies process has some way to go before it can be truly classified as highly participatory.

IDA recognises that the impact of its programmes on poverty can be judged only by the results of its operations achieved in the field. It has taken significant steps to better define how its projects will contribute to poverty reduction. Monitorable indicators, related to the objectives of each new project, are defined and recorded at the design stage. IDA attaches great importance to the completion of country poverty assessments for all major IDA recipients. It continues to emphasise social sector lending for health, education and social welfare and poverty-targeted investments that disproportionately benefit the poor or contain specific mechanisms for identifying and reaching them.

Total IDA disbursements on social sector investment projects have been increasing rapidly. These disbursements under IDA 10 amounted to US$3.5 billion or IR£2.27 billion. Total disbursements increased at an annual rate of 24 per cent during the IDA 10 period which compares with an average annual increase of 11 per cent during the IDA 9 period. The bulk of this assistance helps meet the basic needs of the poor, such as the provision of primary education, basic health care, access to clean water, and low-cost sanitation, in the poorest countries

IDA is now the largest external financier and source of advice on social sector policies in poor countries and disbursements for social sector investment projects are expected to continue to increase rapidly. IDA also plays a key role in the economic and social development of these countries.Its purpose is not to provide short-term humanitarian aid, but to create the conditions in which the countries concerned can permanently raise the living standards of their peoples. Its lending programmes are primarily aimed at providing resources for investment projects that are not only essential for the economic and social development of the borrowing country, but also technically and economically sound. The IDA also lends for more comprehensive economic programmes which facilitate the long-term growth of the economy or of a sector. In recent years, it has increasingly provided financial aid to enable poor countries to introduce and implement urgent economic policy reforms and structural adjustments.

IDA remains committed to sound environmental stewardship and has financed a significant and increasing number of projects specifically aimed at environmental objectives such as conservation, sustainable resource use and pollution management.Even more important is IDA's continuing effort to thoroughly integrate environmental considerations across the spectrum of its projects and other activities. IDA employs an environmental assessment process to ensure its operations meet a high environmental standard.

The acceleration of development in Sub-Saharan Africa remains IDA's greatest challenge. Those African countries which are trying to perform well on a sustained basis will continue to receive priority in the allocation of IDA resources. Approximately 40 per cent of IDA's financial support goes to sub-Saharan Africa, making IDA the most important source of concessional lending for the region — concessional lending means lending at less than the normal commercial terms. Countries in sub-Saharan Africa have recently experienced an upturn in growth which reached 4 per cent in 1995 after averaging just 0.7 per cent in the previous four years. This recovery was due in part to the effect of reforms undertaken by a number of countries. Many countries persisting with reform programmes, such as Ghana, Tanzania and Uganda, have recovered dramatically from economic decline in the 1980s. Africa is now just working its way from stagnation to recovery and carrying out important political reforms in parallel. The aggregate figures mask great variations in performance between countries in the region. While the growth of GDP of some African borrowers began to improve in recent years, poor policy performance and civil conflict in some countries have made it difficult for IDA to support the desired level of investment in the area.

The problem of the crushing burden of service payments, in respect of debts incurred in the past, faced by the poorest countries provides a grim background to the activities of IDA and the World Bank. An equitable resolution of this problem is the aim of all parties. Members will already be aware of the main features of the debt initiative, agreed by the IMF, the World Bank and bilateral creditors last year. I do not propose to repeat them here. However, the establishment of a debt initiative of any description is a major achievement in itself and a testimony to the negotiating skills of the managing director of the IMF, the president of the World Bank and their staffs. This could not reasonably have been foreseen a number of years ago. Now it is becoming a reality and countries are being considered for assistance under it. Members might wish to be reminded that because of their high grant element, IDA credits do not generally worsen borrowers debt service burdens. This grant element consists of long maturities — often 30 years or more — significant grace periods of approximately ten years in which there is no capital repayment and negligible interest rates of approximately three-quarters of 1 per cent. This is a particularly important consideration in the case of the 41 IDA borrowers which are classified as heavily indebted poor countries. Specific measures are being taken to ease the burden on those countries.

I will now report on the use of the funding provided to IDA under the 10th replenishment from 1 July 1993 to 30 June 1996. During the period of IDA 10, the association has promoted economic and sectoral reforms in recipient countries as a means of encouraging growth and development. Concern with basic social services has been another major theme for IDA. It has made provision for specific budgetary allocations for these sectors as well as the promotion of arrangements on the ground to make optimum use of scarce resources.

In general, Ireland welcomes the increased priority accorded to investment in people under IDA 10 and particularly the incorporation of gender and policy issues into country assistance strategies.We also strongly support the highlighting of child labour, forced labour and environmental procedures under the country assistance strategies.

The specific highlights of the period covered by commitments from 10th replenishment include the following. The number of eligible countries increased from 70 to 79. Most of the new borrowers are newly independent countries, such as Armenia, Bosnia-Herzegovina, Eritrea and Tajikistan, in need of exceptional assistance with policies, institutions and aid co-ordination. IDA was able to respond and did so in partnership with other agencies. Sound economic and social policies are a prerequisite for effective resource use and, thus, for accelerating growth and reducing poverty. IDA resources are allocated primarily on the basis of country performance. Poor countries with the best policy performance receive the largest relative commitments. IDA's implementation efforts have resulted in a marked acceleration in the pace of disbursement. Total disbursements during the IDA 10 period exceeded US$17 billion or IR£11.04 billion, some 20 per cent more than during the IDA 9 period. The evolution of disbursements during the IDA 10 period reflects the increasing priority accorded to investments in people. Disbursements for social sector investment projects to improve education, health care, nutrition, water supply and sanitation for poor people increased by nearly 70 per cent relative to the IDA 9 period, reaching US$3.5 billion. Many countries have made formulating and adopting policies conducive to poverty-reducing growth their highest priority. During the IDA 10 period new adjustment operations which accounted for one-quarter of commitments supported policy reforms in more than 30 countries. A total of 41 of IDA's borrowers are in Sub-Saharan Africa. Most of them depend on aid flows to a great extent. Because these countries must grow rapidly if they are to offer their expanding populations a way out of poverty, this region has the greatest concentration of IDA activities. Individual operations, as well as country assistance strategies, are increasingly designed following consultations and drawing on lessons learned not only in IDA operations but also by other agencies. Nearly one-half of IDA 10 operations made use of one or more of the four strongest forms of participation which include joint assessment, shared decision-making, collaboration and empowerment of beneficiaries. Formulation of country assistance strategies benefited from consultations with a wide range of policy makers and representatives of civil society.

The IDA 10 period saw a continuation of IDA's efforts to develop and implement effective programmes of assistance, focused on country specific poverty reduction strategies. Progress was made in many areas. However, much remains to be done to further improve ownership of reform programmes and foster local institutional capacity, to sharpen the poverty focus of IDA activities, to enhance project effectiveness and to strengthen partnerships with all stakeholders, both internationally and within the poor countries it is IDA's mandate to serve.

Other areas which have been prioritised under IDA 10 include research into disadvantaged areas, involvement of non-governmental organisations and gender sensitivity, recognising in particular the role of women. Some specific actions taken by the IDA during the 10th replenishment include the following: in Africa more than six million textbooks were distributed, mainly to primary schools; in Pakistan more than 7,000 school classrooms were constructed; in India 64,000 health care workers were trained; and in Bangladesh, more than 250 kilometres of rural roads were improved. Overall, given that development is predicated on sound economic and social policies, it is not surprising that the poor countries with the best performance receive the largest relative commitment from IDA. Ireland supports the concentrated use of scarce resources on good performers, but is concerned that this policy should not be pursued to such a degree that the poorest countries might irretrievably lose out and we have continued to make that point in discussions with the various agencies.

Ireland's key focus in its dealing with the International Development Association, specifically with IDA 11, is to ensure that adequate resources are provided to Sub-Saharan Africa, which is a particular objective of Irish policy; IDA resources be used efficiently and effectively in terms of lowest possible amount of administration; funding be linked to sound economic practices, including good government; and progress is made on creating the conditions that will promote the development of civil society.

Our Government accepts that an important determinant of good performance is whether the borrower's macro-economic and structural policies contribute significantly to the central objective of reducing poverty within a framework of good government. This brings me to the issue of Ireland's contribution to the IMF's Enhanced Structural Adjustment Facility known as ESAF. With regard to the Enhanced Structural Adjustment Facility of the IMF, which refers to cheap loans granted to the poorest countries, I state again that the Government does not propose to authorise Ireland's contribution to ESAF in advance of a satisfactory operational implementation of a comprehensive debt relief framework. The Government accepts that the debt initiative adopted at the annual meetings of the IMF and the World Bank in October 1996 represents a step in the right direction. The Minister for Finance, Deputy Quinn, indicated on behalf of the Irish Government to the executive director of the Irish constituency at the IMF that the Irish contribution to the current ESAF would need to follow rather than precede implementation of the debt initiative for the Highly Indebted Poor Countries known as HIPCs. Ireland's contribution to ESAF remains conditional on a satisfactory operational implementation of the debt initiative. The same considerations will apply to any other source of funding that might become available as a result of the optimisation of the use of resources by the IMF.

A preliminary review of the debt initiative will take place at the spring meetings of the IMF and the World Bank, which are due to commence this weekend. The review of the operation of the debt initiative will provide an opportunity for Ireland to consider again how Ireland's participation in the initiative might best be effected.

A key concern is the view, widespread in Ireland and indeed shared by Deputies on both sides of the House, that the conditions attached to ESAF programmes may impact disproportionately on the poorest and most vulnerable sections of the community. I note and welcome that the IMF has commissioned a small number of independent consultants to carry out an evaluation of several aspects of ESAF-supported programmes.I very much welcome the focus of the consultants and their concentration on three key topics, namely, developments in countries' balance of payments during ESAF-supported programmes; social policies and the composition of Government spending during ESAF-supported programmes; and the determinants and influence of differing degrees of national ownership of ESAF-supported programmes.

The consultants' findings will be relevant to the Government's consideration of Ireland's contribution to ESAF, particularly in the context of the evolution of IMF policy on ESAF conditionality. In this context, I acknowledge the contribution of the non-governmental organisations in highlighting the impact of excessive debt and the difficulties this poses for the affected countries in reducing poverty. Several of these agencies have an impressive track record in working to ease the lot of the poorest. Their considered and thoughtful opinions on a wide range of developmental issues, forged out of long experience in the field, provide a valuable perspective which has not been in any sense ignored by the Government. In our consideration of developmental matters, we have accepted their voice is a valuable contribution at national and international level and I pay tribute to their work and commitment.

Turning to the linkages between our contributions to the IDA and Irish Bilateral Aid Programme, Deputies will appreciate that contributions to multilateral bodies, like the IDA, are only part of Ireland's overall contribution to overseas development. Inclusive of bilateral and multilateral funding, Ireland's official allocation to aid has risen to IR£122 million in 1997. This is the highest level ever in monetary terms and as a percentage of GNP. This also accords with the Government's stated policy to move steadily towards achieving the UN goal of 0.7 per cent of GNP. I should say that this year the figure is 0.31 per cent of GNP. As recently as 1992, the figure was 0.16 per cent of GNP, so we have doubled the amount in the intervening years. I emphasise it is a time of high economic growth so any percentage of a rapidly increasing GNP is valuable in real terms on the amount of money provided.

The priority for Irish Aid is to contribute to the long-term economic and social development of the poorest countries, especially those in Sub-Saharan Africa. Irish Aid has identified six priority countries for the receipt of assistance — Lesotho, Tanzania, Zambia, Ethiopia, Uganda and Mozambique. The bilateral aid programme also co-funds aid projects with Irish and international non-governmental organisations.

Irish Aid works closely with the host governments in partner countries at national, regional and local levels. This approach has the advantage of increasing the likelihood that individual projects will be maintained beyond the duration of direct Irish Aid involvement. More generally, Ireland's primary focus on the poorest countries of Sub-Saharan Africa dovetails well with IDA's emphasis on assisting the poorest developing countries.

Ireland's membership of IDA was authorised by the International Development Association Act, 1960. Our contributions to the various replenishments have been authorised by amendments to that Act and this Bill will enable us to make our contribution to IDA 11. The Bill is essentially a one section Bill authorising Ireland's contribution to the replenishment. The table in section 1 merely sets out the historic pattern of contributions made by Ireland since the inception of the IDA in 1960.

In summary, the Government is determined to continue to work effectively with the IDA in the interest of promoting development in the poorest and least developed countries. This is not to say that the IDA is blemish free. It is quite clear that, in the context of further progress toward the global economy, specific measures are necessary to ensure that the least developed countries get a fair opportunity to participate. First, if this is to be achieved, the developing countries will have to play a greater part and essentially take charge of the development processes. Second, it will be necessary for the IDA to continue to take action to refine its policies and programmes to address real needs in the countries concerned. Third, it will be necessary for IDA to ensure its services are provided in an efficient and effective manner. I recommend the Bill for the approval of the House.

On the Minister's last point, he said: "this is not to say that the IDA is blemish free." While we support this Bill, and Governments through the years have provided for replenishments for three year periods, there is much concern about giving loans, whether "soft" loans or interest free loans, which may impose much hardship on the poorest countries. Many of the NGOs, which contacted me and other Deputies, said that when we talk about the objectives of the IDA being closely related to the bilateral aid programme, we are talking about two different things because the bilateral aid programme provides grants to the poorest countries. A major concern is that we are giving loans to countries which cannot pay them back.

Having said that, we have supported International Development Association (Amendment) Bills in the past. I notice on this occasion we will make a total payment of £13 million to the 11th replenishment of the International Development Association, which is welcome. I hope the funding we provide, whether loans, credits or grants, will focus on poverty reduction and on human development in poor countries. We hear much about restrictions which are sometimes laid down, particularly in relation to ESAF about which I will speak. If restrictions relating to economic reforms and cutbacks are laid down, they will cause more poverty in these countries. There are examples of countries with low inflation but where poverty has increased. Uganda is a particularly good example.

I was interested to hear that the US contribution will not be available in the first year of the three year period and will be available only in the second and third years of the IDA 11th replenishment.This has led to the need for a one year interim fund to which Ireland will commit £4.3 million in 1997. I am worried that the richest countries are not providing funding, not meeting the UN target as regards GNP and have cut back. The balance of the Irish commitment will amount to £8.7 million in 1998 and 1999. I hope we use our considerable influence to try to get rich countries to commit themselves to meeting the UN target.

Two years ago, at a time when countries tried to increase their efforts to meet the UN target, 21 of the richest countries in the OECD reduced official development assistance. The figure for 1995 was 0.27 per cent GNP, which was appalling and an indictment of the richest countries. It is welcome that we have managed to increase our percentage of GNP to 0.31 per cent this year. At the Fianna Fáil Ard-Fheis last weekend I welcomed that increase and said we would increase our commitment to ODA when in Government. The proposal made by groups such as the Debt and Development Commission and NGOs such as Trócaire for what they call a once off arrangement for the writing off of the debt of the world's poorest countries should also be examined. I hope the Minister will press for that when discussing this issue with other Government Ministers.It sounds very simple but it has been sought for years. No previous Government did it but it is the way to solve the serious problems.

One of the issues raised by the Debt and Development Coalition regarding Uganda was the disappointment that the heavily indebted countries initiative of which the Minister spoke has been postponed for two years. Uganda, the first country to qualify under that initiative, will not now qualify for two years unless there is a change in attitude. Countries, such as the US, Japan, Germany and Italy, have used their considerable clout to delay that decision. It means that one million Ugandan children, who would receive basic primary education, will not get it unless there is a change in the thinking of rich countries. It is most important that that initiative is pursued. I agree with the Minister that we must first have the initiative before we contribute to ESAF. Full marks go to the Minister for Finance who pointed that out in his discussions with the Joint Committee on Foreign Affairs Subcommittee on Development Co-operation. I hope we pursue that route so that we first take the initiative involving countries in severe debt before we make contributions to ESAF.

I received a figure from the Debt and Development Coalition stating that African countries are making $12 billion in debt repayments to their creditors in rich countries. That is a frightening figure and, combined with the strict conditions attached to structural adjustment programmes, the situation is serious for people in these countries. The IDA and the World Bank have been praised for their initiatives but the Debt and Development Coalition states that two thirds of repayments go to the World Bank. I hope it deals with the issue of debt relief and cancellation. While it may be part of the problem, it can also be part of the solution.Pressure should be brought to bear on it to establish a system of debt relief. Commercial banks also make loans as well as the IDA, the soft loan arm of the World Bank. I have seen figures which indicate that 10 per cent of African debt is owed to commercial banks. I hope the World Bank leads the way on debt relief and that there will in future be more direct grants, which is the route of the bilateral aid programme, rather than loans with strict repayment conditions.

The comments of the Minister of State on ESAF are welcome. At meetings of the Joint Committee on Foreign Affairs and its Subcommittee on Development Co-operation, the issue was raised of what drastic and immediate action can be taken. One of the subcommittee's suggestions was that the IMF should sell some of its gold but I do not know how successful that would be. A delegation from the Debt and Development Commission, meeting the Joint Committee on Foreign Affairs this afternoon, made this suggestion as part of the solution to serious debt. Any initiative we can take should be pursued. Repayment conditions are laid down and poor countries are told to reduce spending and inflation, yet poverty has increased in some of them.

The Minister of State spoke of the exploitation of workers, especially child labour. The West has a major role to play in helping with the trade questions which have arisen in discussions in this House and at committees. If we do not impose restrictions on trade with these countries, a contrived situation will continue to exist where production costs are kept low and there will be continuing exploitation of workers and child labour. The latter aspect was well highlighted by some NGOs during the Christmas period when they launched an effective campaign against toys produced in these countries for Christmas. It was an excellent campaign and brought home to people the conditions under which very young workers produced these toys which we take for granted. I hope we continue to highlight that and that the Minister of State takes up the matter with his colleagues in Government.

Arms are still being sold to people involved in many conflicts. Some EU countries involved in arms trading make high-minded and lofty statements about stopping fighting and ending wars. They encourage conflicting countries to get involved in peace negotiations, yet they hypocritically sell arms to those involved in such conflicts. We can make a strong stand on that in the EU and explain to our European colleagues that they are adding to conflicts and serious problems. The figures we obtained from the international alert group, which we met at a meeting of the Joint Committee on Foreign Affairs, was that there are 32 major conflicts throughout the world, some of which involved western countries, and that must be tackled.

When debating the drugs trade, we should remember that much of it in the poorest countries is affected by how we act here. If western European countries have dealings in the drugs trade, it adds to conflict and exploitation, especially in African countries. A sustainable development plan must be drawn up, especially for central Africa. When discussing the debt problem, all problems affecting Africa should be addressed, especially the Saharan and sub-Saharan areas. We cannot have a situation where ever more money is taken from these countries by restrictive decisions under ESAF or loans which are not suitable to people who live in those countries. This legislation is welcome but there are other issues which need to be looked at. I hope the Minister will respond in more favourable terms when he has the opportunity.

There were contradictions in the Minister's speech. He spoke about countries which have done well. However, the actions of some of the richer countries have delayed many programmes such as the programme for Uganda. We must use our influence to ensure real progress is made.

Since the Tánaiste and Minister for Foreign Affairs introduced the Irish Aid Consolidation and Growth Strategy Plan in 1983 we have added three countries to the bilateral aid programme. That programme is most effective and is referred to in the Tánaiste's speech. I hope other initiatives will be in line with that programme.

I welcome this Bill. I hope richer countries will come on board whether by increasing their overseas development aid or by involvement in initiatives to help heavily indebted countries. Programmes for Africa, in particular, must not be delayed again and we must not fall behind in our attempts to reach the UN's 0.7 per cent of GDP target, as happened in 1995.

It is amazing that western and northern European countries have made great progress in trying to reach this target. However, the G7 countries have not lived up to their commitments. The same is true with regard to UN funding. We have to make a stand on this issue and I hope the Minister will be successful in trying to achieve this target.

I am delighted to participate in this debate. I welcome this enabling Bill so that Ireland can contribute to the 11th replenishment of the International Development Association. I have contributed to every IDA debate in the Dáil and Seanad since 1981. In each of those debates it was necessary to criticise the USA's overseas development assistance policies. In the 1980s this criticism related to its welshing on its contributions to IDA. The Cold War criticism of the USA was often linked to its attaching political strings to overseas aid. The US gave assistance to countries with appalling human rights records. This assistance often went on purchasing arms at the expense of humanitarian assistance on education and basic sanitation.

It is a pity we must still be critical of the US in the post Cold War era. The US has decided not to make any contribution in one of the years included in this replenishment. As a result, an interim fund has had to be established to compensate by drawing additional funds from other donors. The US is friendly towards Ireland but I cannot understand why the wealthiest country in the world is again shaming itself by failing to contribute a minuscule amount of money by its standards.IDA loans and concessions assist countries and people who are poverty stricken and debt distressed; the poorest of the poor.

In 1993 I spoke from the Opposition benches on the 10th replenishment. The number of countries qualifying for IDA assistance increased between the 9th and 10th replenishments. The level of destitution in certain countries in Africa had increased. Five or six countries which did not qualify for the 9th replenishment qualified for the 10th replenishment. Poverty was becoming more pervasive, especially in sub-Saharan Africa. All of the new countries which qualified were from that region.

I am not sure if any new countries have qualified in the intervening three years. I hope not, and it may be a hopeful sign that the Minister did not refer to this in his speech. However, we are delighted that this replenishment is taking place. Governments must ensure that moneys borrowed are spent on basic infrastructures and human needs such as education, sanitation and health care.

The UN Development Programme publishes a yearly report entitled The State of the World's Children. It is frightening to read the key indicators of human welfare used by this report. In countries such as Sierra Leone, Mali and Guinea Bissau a huge number of children have no access to primary education. The mortality rate among children under five years of age is extraordinarily high. Very few people have access to clean water or any kind of primary health care. If one compares the current statistics with those of five or six years ago, one finds there is relatively little improvement in the welfare of people in these countries. A great deal of development policy is not working.

Ireland is fortunate to be one of the 33 donors to the IDA fund. According to the OECD, we are the 17th or 18th wealthiest country in the world. Too often policies do not meet the genuine welfare needs of people. There are successes but many countries remain in grinding poverty. Much of this is due to bad government but there is also bad trading practice by the West which keeps these countries in grinding poverty. They cannot trade with the western world or even between themselves on any kind of equality, very often because of our trade policies. That issue needs to be examined.

Deputy Michael Kitt dealt with the overall issue of debt and its grindingly destructive effect on so many poor countries. It is still true in the case of many countries that their repayment outflows are greater than inflows of assistance in any one year, an utterly unsustainable position.

The World Bank and the International Monetary Fund, the so-called Bretton Woods institutions, the main lenders to countries like sub-Saharan Africa that do not have an equity or loan market at home have contributed to their debt problems. Eighty per cent or 90 per cent of our national debt is generated within our own resources, borrowed from our own people, but theirs is enormous. In a poor country, they would not obtain 1 per cent or less of their borrowing needs from their internal markets and must seek it abroad.

We must bear in mind the nature of that debt and the fact that the World Bank and the International Monetary Fund have been examining it over the past five or six years. We have had the recommendations of the Paris club, John Major's set of concessionary suggestions when Chancellor of the Exchequer in Britain many years ago, which were presented to the Trinidad Commonwealth Conference, the so-called Trinidad terms. They are inadequate to address the problem, although they are not yet even part of the policies of these Bretton Woods institutions in terms of debt forgiveness. While some progress has been made it has not been anything like adequate.

We are a small, generous country particularly, in terms of what our non-governmental organisations do, on a voluntary basis. Trocaire, GOAL and all the other NGOs, small and large, are to be congratulated on the quality of their well-targeted work and the manner in which they identify the issues needing to be tackled.

With Deputies Kitt and Gallagher I have seen our official overseas policy being implemented in places like Tanzania, Uganda and elsewhere. It is well focused on the real issues, building the people's capacity to eventually grow sufficient food to build their education system, provide sanitary services and so on. These agencies work with the people in a spirit of partnership, seeing and treating them as equals, which is extremely important.

No doubt our anti-colonial nightmare past helps us in assisting the peoples of Africa, with a total colonial history at least in the 19th century and helps our image there. Our Governments are to be congratulated, since the initiation of an official assistance programme in 1974, whose basic philosophy has been informed by the principle of tackling basic needs in a spirit of partnership with the recipient country.

While there are some appalling cases worldwide, I shall deal with Zaire for a few moments. Zaire a sub-Saharan country, one of the largest, most important countries in Africa, located in the middle of Central Africa. Since the mid-1960s it has had an appalling history of bad governance, dictatorship and corruption. It is amazing the country has held together at all. Some people attribute its survival to President-for-life, Mobutu, although I doubt that. It is now rapidly approaching the post-Mobutu era; I believe, the rebels who have captured more than half the country within a relatively short time will capture the remainder. In development terms that country has been driven down in terms of economic development and the welfare of its people.

The international donor community, including this country, has a special responsibility to take on board a country like Zaire which has suffered the worst ravages of colonial and post-colonial exploitation, bad governance and corruption. The sufferers are the mass of its population which runs into some tens of millions. Zaire has the worst education system in the world that probably touches less than 5 per cent of its young people, the worst health care system in that some 2 per cent or 3 per cent only of Zairean babies are immunised against common diseases like diphtheria although it would only cost a few pence per child.

We must start at the very beginning in that very large country. If it breaks up, its effect on the stability of a dozen countries surrounding it will be enormous. Nowadays we live in a global village and while we might think a country like Zaire is very far away, it is very close in that our welfare and the stability of our system is very much bound up with retaining a level of stability and human rights, ensuring that human dignity is respected in countries as far away as Zaire.

In this post-Mobutu era we should take the lead in ensuring Zaire is made a special case for development assistance. The mistakes of the past must not be repeated; development assistance should no longer go to "security". The purchase of arms or ammunition should not be part of development assistance policy. Development assistance will have to contribute to the building of a judicial and educational system, health care and, above all, to good governance in that country, lack of which has damned it and many another developing one. Such countries have been damned by the foreign and external aid policies of many major powers in the western developed world who have actively supported bad governance and allowed development assistance to be expended on the purchase of arms that eventually were used to kill hundreds of thousands of people and to lay hundreds of thousands of mines which today kill and maim people in Angola, Mozambique and in every other country where there has been major conflict over the past 25 years.

We must remember that very often funds contributed through development assistance policies were used to purchase those weapons of death still sown in the ground in so many countries. A country with an excellent reputation like ours, which has never played any part in that, must give a lead and insist that type of genocide is never repeated.

One of the best methods by which Zaire — one of the largest countries within Africa, driven down by what has taken place there over the past 35 years — can be assisted is by our adopting an entirely new approach to development assistance.

I will comment on some of the Minister of State's remarks on our development assistance programme in recent years. I am not being self-congratulatory merely because I find myself on this side of the House. What we have done for such countries in recent years has been truly praiseworthy. In 1993 the value of Ireland's ODA was £54.6 million, 0.2 per cent of our GNP. We have steadily progressed at least half way to the United Nations goal of 0.7 per cent of GNP. In 1996 the value of our ODA was £106 million and this year it stands at £122 million or 0.31 per cent of GNP which includes the growth in the value of our GNP in the meantime. There is not a major growth rate between 0.2 per cent and 0.31 per cent but there is a huge difference in monetary terms. In three years we have more than doubled the amount of money we are contributing to overseas development assistance and should be congratulated on that.

We live in a world where there is a certain amount of what is called "donor fatigue". Many Governments including the UK and Germany — even though their position is good from the point of view of the United Nations target and their generosity is well noted — are cutting back on their overseas development assistance. During its economic recession Sweden, one of the most generous countries in terms of ODA, cut back in a major way. There is "donor fatigue" about ODA. which donor countries suggest is related to public opinion. I do not believe that.

Last week I attended a conference in Holland which dealt with public support and public opinion in relation to overseas development assistance. The Irish Council for Development Education, set up by the Government some years ago, gave an excellent paper to that conference on public attitudes and support for ODA in Ireland, especially among young people. A scientific survey carried out by IMF showed 74 per cent of young people were aware of overseas development issues and they supported the idea of countries like ours making a major contribution towards development in the Third World. In other words young people understand the main tenet of the development issue, the need for the transfer of resources by better off countries to less well off countries.

Papers were read to us by people from Holland, Germany, France and all the other European Union countries. Each one had conducted a similar survey which showed, despite policies at home and public opinion among the adult or the younger population, support for a greater level of resources from all these countries being paid in overseas development assistance. As Members we must learn that lesson. We are always acutely aware of public opinion. Clearly it is saying there is no objection to us spending £122 million, which would build many roads, on overseas development assistance. The other eloquent statement of our generosity and public support is the voluntary contribution made by NGOs in the amount of money raised and the number of young people GOAL can recruit, for example, engineers, nurses and doctors who give two or three years of their professional lives working for nothing in the development of poorer countries.

(Laoighis-Offaly): I am pleased to support this Bill. In my short time here this is the second International Development Association Bill we have discussed and the second time the House has been asked to approve an extra contribution by Ireland to the International Development Association.

Rightly, we are critical of much of the work undertaken by the international monetary institutions and some of the work they do not undertake.It is widely recognised that one of the areas in which they have been most successful in their efforts to alleviate poverty in the poorest countries is through the work of the International Development Association, because it works from a development perspective and not from a short-term financial or monetary perspective; the finance is available on attractive concessionary terms and the criteria by which the IDA works in disbursing the money are, in relative terms, progressive.I compliment the Minister on his comprehensive overview when introducing the Bill of the work of the International Development Association, the particular situation affecting the 11th Replenishment, the key issues in the negotiation of the IDA 11 and his further contributions on the ESAF.

One of the reasons the House supports any increase in our contribution to the International Development Association is because of its clear focus on poverty reduction and poverty elimination.One of the criticisms we make of many of the programmes undertaken by the IMF and the World Bank is that they focus on the macro situation without taking the micro needs of the economy or parts of the economy of the country concerned into account. The Minister correctly outlined during the negotiation of the 11th Replenishment that the key issues included fine tuning the poverty focus of the association, introducing proper assessment of the environmental impact of its projects and concentrating on the problems of the low income highly indebted countries in servicing and redeeming their debt.

During the debate in the Sub-Committee on Development Co-operation of the Joint Committee on Foreign Affairs last year and the previous year on the question of Ireland's possible contribution to ESAF — the Enhanced Structural Adjustment Facility of the IMF — it was pointed out by Members of both Houses of the Oireachtas and by NGOs that if Ireland was considering making an extra financial contribution to the international financial institutions, the IDA was the more preferable place in which to lodge our contribution than the Enhanced Structural Adjustment Facility. I am pleased policy had changed in relation to contributions to ESAF and that an increased contribution is being given to the International Development Association. The clear view of Members was that we should contribute more money to the International Development Association and that we should use an amount of our direct aid budget to finance not initiatives by the international institutions but small scale local initiatives in countries such as Tanzania and Uganda. Those of us who have had the opportunity to visit those countries will be aware much work has been done in setting up small local credit schemes, many of which are focused on the needs of women. In Tanzania I saw many credit union style operations set up at local level which, in some cases, helped women get out of prostitution and in other cases helped widowed women with large families to get back into some form of economic activity and away from the enslavement to the relatives of their dead husbands to which some of these societies still condemn them. Our view was that we should support this initiative as well as the small local scale credit interventions. We did not believe it was appropriate for Ireland to contribute at this stage to the Enhanced Structural Adjustment Facility.

Debate adjourned.
Sitting suspended at 1.30 p.m. and resumed at 2.30 p.m.