Written Answers. - Debt Cancellation.
Michael D. Higgins
Question:
82
Mr. M. Higgins
asked the
Minister for Finance
if he will advance, at the forthcoming meeting in Washington where the issue will be raised, the opinion of 850,000 signatories from Ireland in favour of debt cancellation.
[19368/99]
In my speech to the joint annual discussion at the IMF and World Bank annual meeting last week, I stressed that debt relief is a vital element in a more broadly based development strategy aimed at growth and poverty alleviation. An extract of my contribution to the meeting on this subject is attached. The full text of my statement is available under the annual meetings section of the IMF website – www.imf.org.
The HIPC initiative, driven by the World Bank and the IMF, is the official response to the need for debt relief, particularly at the multilateral level, but also involving substantial, if not complete relief, in respect of official bilateral debt. The initiative is clearly at a crucial stage in its development both in relation to its general implementation and its financing.
As originally conceived, the initiative aimed at both (i) freeing the most heavily indebted poorest countries from the burden of the unpayable element of their debt, and (ii) offering them a definitive exit from the debt treadmill which is seriously undermining their development.
Following the recent review of the initiative, it has been substantially enhanced – the amount of debt relief on offer has been doubled, a wider range of countries is to get faster and deeper relief – and my concern now is that these improvements are fully financed.
I would remind the Deputy that Ireland was to the fore in calling for such improvements, in particular via the submissions made by my Department and the Department of Foreign Affairs to the review of HIPC, which preceded them.
We are all aware of the wide public concern for a serious attack on the problem of unbearable debt which is reflected in the extent of popular support for Jubilee 2000. This must be addressed and the HIPC initiative must be implemented in a way that achieves its basic aims, as set out above.
At the same time, the World Bank, the IMF, and individual members and creditors, must remain open to any further enhancements required for effective debt alleviation, in particular taking greater account of human needs in determining eligibility and the extent of the relief required.
Deputies will recall that Ireland is contributing fully to the enhanced initiative. We are also participating in the alleviation of bilateral debt relief in relation to some of our priority aid countries even though our own bilateral assistance has been in the form of grants.
In my speech to the IMF annual meeting, therefore, I called on governors to resolve any outstanding difficulties in implementing the enhanced HIPC initiative, particularly in regard to its financing. I am glad to say that there appears to have been substantial progress in financing the initiative in the course of the annual meetings. This is an aspect which we will need to keep under close review.
With regard to the central point of the Deputy's question, I am not convinced that a blanket call for debt cancellation is attainable. Nether is debt cancellation on its own likely to provide a panacea for the economic and development need of HIPC countries. Debt cancellation could send negative as well as positive signals. It does not in itself offer a long-term sustainable solution, in that it could well deny the countries affected access to sources of private capital, which are essential to their economic development. It might also lead to a drying up or reduction of some current bilateral aid which is intended to assist countries in their debt financing. Full cancellation of multilateral debt is not likely to be politically acceptable to the membership of the institutions concerned, who would be required to finance it.
I fully support the bilateral initiatives by individual countries to relieve bilateral debt in line with the call of the G8 at their Birmingham summit. I would remind the Deputy that, such bilateral relief is also part of the HIPC initiative.
I see the HIPC initiative as a suitable framework through which viable economic and social reform programmes including debt relief measures can best be achieved. In this regard the Deputy should be aware that Ireland is also pressing the multilateral institutions to ensure that programmes drawn up by HIPC countries take adequate account of the social needs of these countries. We are also supporting increased co-ordination between the various institutions involved and with a wider spectrum of society in the countries concerned to ensure that aid, including debt relief, is used in the most efficient way to promote development and protect the social sector.
Statement by the Hon. Charlie McCreevy, T.D., Governor of the Bank and the Fund for Ireland, at the Joint Annual Discussion
Extract:
HIPC Initiative
Debt relief is a vital element in a more broadly based development strategy aimed at growth and poverty alleviation. The HIPC initiative, driven by the bank and the fund, is clearly at a crucial stage in its development. Although its beginnings were relatively modest, its ideals, or declared aims, were ambitious.
It aims at both freeing the most heavily indebted poorest countries from the burden of the unpayable element of their debt, and offering them a definitive exit from the debt treadmill which is seriously undermining their development.
We are all aware of the wide public concern for a serious attack on the problem of unbearable debt which is reflected in the extent of popular support for Jubilee 2000. This must be addressed and the HIPC initiative must be implemented in a way that achieves its basic aims. We must remain open to any further enhancements required for this to be achieved, in particular, taking greater account of human needs in determining eligibility and the extent of the relief required.
I would, therefore, call on governors to resolve any outstanding difficulties in implementing the enhanced HIPC initiative at this stage, particularly in regard to its financing.
Earlier this year, Ireland has adopted legislation enabling it to participate in funding the enhanced initiative to a degree commensurate with its relative standing in the donor community.
