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]
Written Answers - Third World Debt.
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.
In that connection, I would draw the attention of the House to the measures in support of third world debt relief which the Government adopted last month. These have allowed Ireland to move from its advocacy role in relation to debt relief and become a direct contributor to the HIPC initiative. They will give Ministers increased moral authority to call for increased efforts by the international community to reduce the burden of debt on third would countries to the greatest extent possible. The Deputy will see that this is precisely what I have done in my speech to the annual meetings.
It provides a total of £31.5 million to assist the most heavily indebted poor countries in the world. The carefully balanced package embraces multilateral and bilateral elements and will also see Ireland honouring its commitment to contribute to the Enhanced Structural Adjustment Facility of the IMF. Fifteen million pounds will be provided for multilateral debt relief, £11 million to the World Bank and £4 million to the IMF; £9.5 million has been committed to Mozambique and Tanzania in bilateral debt relief; £7 million will be provided to the Enhanced Structural Adjustment Facility, ESAF, of the IMF and £22 million of the package represents new funding for poorer countries and is in addition to the funds already commited in the Overseas Development Assistance Budget.
At the time, I also announced a set of new principles which will govern Ireland's policy towards Third World debt. These principles take account of the representations I received from the non-governmental organisations active in this field. In brief, the principles seek to ensure that debt relief measures take full account of the social dimension, embrace widespread consultation in the countries in question and encourage sustainable economic development. I strongly advocated these principles during my speech at the IMF/World Bank meeting.
This issue was discussed at the Interim Committee of the IMF and the Development Committee which is a joint committee of the IMF and the World Bank. These committees are the principle decision making bodies of the Bretton Woods Institutions. Both committees strongly endorsed progress under the Debt Initiative. The communiques issued after both meetings are being placed in the Dáil Library.