Dáil Éireann debate -
Tuesday, 8 Feb 2000

Vol. 513 No. 6

Written Answers. - Debt Relief.

John Gormley

Question:

244 Mr. Gormley asked the Minister for Finance if his attention has been drawn to the fact that Sunday, 20 July 2000, is debt decision day; if he will be supporting the full cancellation of debt; and if he will make a statement on the matter. [3407/00]

Minister for Finance (Mr. McCreevy)

Sunday, 23 July 2000, marks the final day of the G8 sum mit which is scheduled to take place in Japan. I understand that this date has been depicted as Debt Decision Day by the Jubilee 2000 organisation, which is campaigning for the total remission of Third World debt.

Since Ireland is not a creditor of any of the world's poorest countries, nor a member of the G8, it is as a member of multilateral organisations, in particular the EU, the World Bank and the International Monetary Fund, that we can best exercise our influence to contribute to easing the debt burden of these countries.

In my speech to the joint annual discussion at the IMF and World Bank annual meeting, last September, I stressed that debt relief is a vital element in a more broadly based development strategy aimed at growth and poverty alleviation. 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 multilateral level, but also involving substantial, if not complete relief, in respect of official bilateral debt. As originally conceived, the initiative aimed 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.

Following a review of the initiative, it was substantially enhanced – the amount of debt relief on offer has been doubled and 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 the HIPC initiative, which preceded them. 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. These efforts are bearing fruit with the recent commitment of the multilateral institutions to target their activities in a comprehensive and co-ordinated way on poverty reduction, that is, through the poverty reduction strategy papers, which will form the bedrock of the World Bank and the IMF's assistance to the poorest countries, and which will also inform the partnership between these institutions and the countries concerned – they will also be a key element in strengthening the link between debt relief and poverty reduction.

The Deputy 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.

With regard to the central point of the Deputies question, I am not convinced that a blanket call for debt cancellation is attainable. The HIPC initiative goes a long way towards tackling the issue of multilateral debt and poverty reduction. While it also envisages substantial reductions in bilateral debt, there is clearly scope for individual countries to go further on this and I am heartened by indications that an increasing number of countries are prepared to do so.