Dáil Éireann debate -
Tuesday, 1 Feb 2000

Vol. 513 No. 3

Written Answers. - Jubilee 2000.

Liam Lawlor

Question:

130 Mr. Lawlor asked the Minister for Foreign Affairs if the Government, in consultation with other EU member states, will press for the cancellation of the debts of impoverished countries as requested by various bodies and supported by 800,000 Irish persons who signed the Jubilee 2000 petition in the context of debt decision day, which is the final day of the G8 Millennium Summit in Japan. [2269/00]

Minister for Foreign Affairs (Mr. Cowen)

I propose to take Questions Nos. 130 and 131 together.

One of the most important challenges facing the international community is that of the debt burden on developing countries, especially the poorest. The debt repayments required of many heavily indebted poor countries or HIPC's greatly exceed development assistance flows. The efforts of many of the most impoverished countries to achieve sustainable development are frustrated by their level of indebtedness. This is clearly unacceptable and underlines the need for a positive and comprehensive response by the international community.

The Government is aware of the extent of public support for the Jubilee 2000 Campaign which is calling for debt cancellation and I welcome their contribution in galvanising international support for greater action. The Government believes that it is necessary to look at every option including, where possible, debt cancellation.

While recognised as well-intentioned, the HIPC debt initiative launched by the World Bank and IMF in 1996 failed to make a significant impact in the majority of the heavily indebted poor countries. There have, however, been posi tive developments on the debt front over the course of recent months.

The annual general meeting of the World Bank and IMF in Washington in September 1999 agreed an enhanced HIPC initiative which is a significant advance on its predecessor. By relaxing the criteria for eligibility, the new initiative is expected to double the amount of debt relief available under the initiative and to increase the number of recipient countries from 29 to 36. The enhanced initiative strengthens the relationship between debt relief and poverty alleviation. In this respect, it reflects one of the central points raised in our own national submission to the HIPC review. As part of the new initiative, each recipient country will produce a poverty reduction strategy paper, designed to ensure that the resources freed by debt relief will be of direct benefit to those in the greatest need.

If it is to make a real difference, the enhanced HIPC must receive the funding it requires as soon as possible. Ireland is advocating that the most generous possible EU support be made available to the enhanced HIPC initiative. In that connection, we welcomed the decision taken on 8 December 1999 that the EU should contribute 1 billion euros to debt relief and the HIPC initiative as placing the EU in the lead role internationally in dealing with the issue. Ireland's share would amount to about six million euros.

This does not, of course, amount to debt cancellation. The growing demand for cancellation by the Jubilee 2000 campaign and others is understandable in view of the impact the debt has on the poorest countries. The strength of international feeling on this issue is recognised and undoubtedly influenced the G7 in their decision to reform the HIPC initiative. Certainly debt cancellation should be explored by bilateral and multilateral donors whenever possible or feasible. Ireland strongly welcomed the recent decision of the British government to cancel 100% of the debts owed to it by HIPC countries. We would encourage other bilateral donors to take similar actions. Total cancellation does, however, raise a number of difficult and complex questions. Debt alleviation cannot be considered in isolation. Issues such as corruption, poor governance, internal conflict and human rights abuses can sometimes play a part. It is natural that creditor governments, who will be expected to pay very substantial moneys in support of debt relief, will want assurances that resources are directed to the alleviation of poverty.

Many heavily indebted poor countries have undertaken major structural reforms to their economies to qualify for debt relief. Under the enhanced HIPC initiative, debt repayments by these countries should fall to a level which is sustainable and which do not deflect scarce resources from important social sectors such as health and education. There will be an extremely positive impact in recipient countries.

Although not a bilateral creditor of the developing countries, Ireland strongly welcomes measures, whether through debt relief or debt cancellation, aimed at easing the burden. At a national level, we have mobilised IR£31 million to help relieve the debt burden of heavily indebted poor countries. We have contributed IR£9.5 million to debt relief in Tanzania and Mozambique, both of which are priority countries for Irish aid. Funds amounting to IR£22 million have been channelled through the World Bank and the IMF to finance the HIPC initiative.

The Government will continue to argue for a generous and flexible approach to heavily indebted poor countries by creditor nations, the Bretton Woods institutions and other relevant bodies. Ireland will continue to press for a vigorous and intensified programme to address this major challenge to development.