Dáil Éireann debate -
Wednesday, 26 May 1999

Vol. 505 No. 4

Written Answers. - HIPCs Debt Initiative.

Ivor Callely

Question:

102 Mr. Callely asked the Minister for Finance if he has satisfied himself that the heavily indebted poor countries initiative is successful; the way in which the institutions contribute through financing debt service; the institutions involved; and their contributions in this regard. [13702/99]

Minister for Finance (Mr. McCreevy)

As I have made apparent in my contributions during the debates in the Houses of the Oireachtas on the passage of the Bretton Woods (Agreements) (Amendment) Act, 1999, the HIPCs debt initiative is a major step forward, but needs to be substantially improved.

I believe that debt relief should be closely linked to the goals of sustainable development and poverty reduction, and that there is a broad consensus growing up at European Union level now in favour of this position. It is clear to me that the underlying programmes for HIPC should focus on high quality growth aiming at improving the situation of the poor and reflect social concerns by protecting social expenditures. In this context, notwithstanding the remarkable achievements so far and the large degree of flexibility applied, the HIPC initiative has been criticised, in particular by NGO'S, as providing too little debt relief too late. In response, several EU member states, including Ireland, have made proposals for changes in the HIPC debt initiative for debt relief to be deeper, to cover more countries and to be provided earlier. These proposals focus on the following areas; the timing of debt relief; the definition of indicators for sustainability; the extent of Paris Club debt cancellation on commercial debt; the extent of ODA debt cancellation the need for an appropriate financing and burden sharing.

These proposals, of course, have important implications for the financing of the HIPC initiative, in particular since even in its current framework the initiative is not fully financed.

The precise modalities for contributions by the various international institutions are set out on the internet websites of the World Bank and IMF. Their availability reflects a new climate of openness and transparency on the part of both of these institutions. The relevant Internet addresses are:

World Bank:	http:\\www.worldbank.org
IMF:	http:\\www.imf.org

The Deputy will wish to be aware of the major review of the HIPC initiative, which is currently under way. My own Department has already made a submission to the first stage of the review process and are currently preparing our submission to the second stage. I have also invited Axel Van Trotsenburg, the senior World Bank official in charge of the review process, to visit Ireland in June. He will have consultations with my Department, the Joint Committee on Foreign Affairs and with interested NG0s. I believe that this visit will offer all of us a unique opportunity to have a positive effect upon the future course of the debt relief process.

Overall, I believe that there is cause for hope that the process of debt relief may be improved and accelerated in the near future. Our belief that the process must become formally linked to the implementation of antipoverty and social development measures in the indebted countries is also gaining ground. We intend, therefore, to take maximum advantage of the opportunity presented by the current review process.