Human Rights Commission Bill, 1999: Report and Final Stages. - International Development Association (Amendment) Bill, 1999: Second Stage.

I move: "That the Bill be now read a Second Time."

The purpose of this Bill is to authorise a contribution of £20 million by the Government to the twelfth replenishment of the resources of the International Development Association.

The International Development Association, or IDA for short, is an affiliate of the World Bank. It is one of the bank's main instruments in the fight against extreme poverty. It was set up in 1960 to assist the poorest countries which cannot afford to borrow money from the World Bank on its normal terms. It lends to countries with a per capita income, in 1998 terms, of less than $895, that is, less than $3 a day. There is also an exception for small island economies that have limited credit worthiness. The beneficiaries of IDA lending are essentially the 2.3 billion people, comprising 53% of the total population of the developing countries, who live in the 78 countries which are eligible to borrow from IDA. Today, 1.5 billion of these people survive on incomes of $2 or less a day, and some 1.07 billion on less than $1 a day.

The mission of IDA is to support efficient and effective programmes to reduce poverty and improve the quality of life in its poorest member countries. IDA helps build the human capital, policies, institutions, and physical infrastructure needed to bring about equitable and sustainable growth. Research conducted by the World Bank has shown, however, that positive growth rates do not automatically lead to poverty reduction. Additional measures are needed to ensure this takes place, and IDA is the primary multilateral agency which is specifically charged with ensuring these measures are identified and undertaken. IDA's goal is to reduce the disparities across and within countries, to bring more people into the economic mainstream and to promote equitable access to the benefits of development.

Sustainable poverty reduction depends on forming effective partnerships, and on systematic inclusion of the poor in the development process. To achieve this, the focus must be on: results, to get the biggest development return from scarce aid resources; sustainability, to achieve enduring development impact within an environmentally sustainable framework; and equity, to remove barriers and open up opportunities for the disadvantaged.

The current debate on development issues often focuses on cases where progress and development fall short of what was expected at the outset. While this is right and necessary if we are to improve performance, we should not lose sight of how much has been achieved over the years. Over the past generation, more has been done to reduce poverty and raise the quality of life than during any comparable period in human history. Advances in health care, in particular, have brought enormous benefits to the developing countries.

Since 1970, infant mortality rates have been cut in half and life expectancy has increased from 55 years to 64 years. Growth in food production has outpaced that of population. Child malnutrition rates are 20% lower than they were 30 years ago and certain nutrition deficient diseases have almost disappeared. Primary school enrolment rates in developing countries have reached almost 80% and gender disparities have narrowed, with the ratio of girls to boys in secondary schools rising to 45%. Adult literacy has similarly risen from 46% to 70%. There is greater consensus than ever before, in rich and poor countries alike, on what governments must do to improve the lives of their people. The developing countries themselves have been the motor driving these achievements, but their efforts have received strong support from donors, including IDA.

That said, it must also be recognised that a large number of developing countries at the lower end of the income spectrum continue to experience unacceptably high levels of poverty and deprivation. In these countries, poverty reduction strategies must help build capacities to address the weaknesses in governance and in institutions which lie at the root of their poor performance.

As a major step toward concerted action for development, the international donor community has agreed to focus on a series of key goals in partnership with developing countries. These goals, which are based on United Nations conferences and resolutions reflecting broad agreement by the international community as a whole, were set out in Shaping the 21st Century: The Contribution of Development Co-operation, issued by the development assistance committee of the Organisation for Economic Co-operation and Development, OECD, in May 1996.

The goals for 2015 include reducing by half the proportion of people living in extreme poverty, achieving universal primary education in all countries and universal access to reproductive health services, reducing by two-thirds the mortality rates of children under five and by three-quarters maternal mortality, ensuring full access to primary health care and reversing trends in the loss of environmental resources. The goals for 2005 include demonstrated progress toward gender equality by eliminating gender disparities in primary and secondary education and the implementation of national strategies for sustainable development in all countries.

IDA is operating firmly in the context of these goals. In relation to poverty, in particular, it undertakes research to reach a comprehensive understanding of poverty and its determinants with a view to choosing approaches to public policy which will have the highest impact on poverty alleviation.

The recently inaugurated Poverty Reduction Strategy Papers is an innovative approach in the fight against poverty, and one which has found wide acceptance among both donor and recipient countries. Among other innovations, they offer a framework within which the World Bank, including IDA, the IMF, donors and beneficiary countries can work together to enhance development impact in a participatory manner, integrating priority measures for poverty reduction and structural reforms within a growth oriented macro-economic framework.

IDA offers loans which are free of interest, carrying only a nominal service charge. The loans have maturities of 35 or 40 years with a ten year grace period on repayment of principal. They are funded by IDA replenishments, which consist of grants provided mainly by its richer member countries. These donor replenishments are supplemented by repayments made by IDA's borrowers in respect of earlier loans and transfers from the available net income of the World Bank.

The twelfth replenishment, IDA12, amounts to SDR 8.65 billion and covers the period starting 1 July 1999. This donor funding, when combined with the reflows and World Bank transfers, will allow IDA to commit lending of about SDR 15.25 billion between 1 July 1999 and 30 June 2002.

The largest pledges to IDA12 were made by the United States, Japan, Germany, France, United Kingdom, Italy and Canada. Some less wealthy nations also contribute to IDA. Turkey and Korea, for example, once borrowers from IDA, are now donors. Countries currently eligible to borrow from IBRD – Argentina, Brazil, Czech Republic, Hungary, Mexico, Poland, Russia, the Slovak Republic, South Africa, and Venezuela – are also IDA12 donors.

The Irish contribution to IDA12 will amount to £20 million. This is made up of a basic contribution of approximately £15 million – 0.18% of total donor resources – an increase from 0.13 % for IDA11. We have also pledged a supplementary contribution of £5 million which brings the total for Ireland to about 0.24% of total donor contributions. Of the donor countries, Ireland, Finland, Greece and the UK have increased their basic shares from that in IDA11, in addition to which Ireland, Australia, the Czech Republic and Israel have added supplements to their basic contributions.

Deputies may note that the Irish agreement to exceed our previous share was instrumental in evoking increases in basic contributions and other supplementary payments and thereby helped bridge the funding gap facing IDA12 and bringing the difficult negotiations on this replenishment to a successful conclusion. The actual cash payments for IDA12 will be made over a six year period beginning in the year 2000. Contributions to IDA are payable from the central fund.

Although it is not specifically a matter for the current IDA replenishment, the HIPC debt initiative is of crucial importance for many IDA countries. As Deputies will be aware, one of the most serious problems with the implementation of this initiative has been the funding question. The IMF has now funded its contribution through donor contributions to the PRGF, formerly ESAF, HIPC Trust and through the sale of gold.

The principal vehicle for World Bank participation, together with some other multi-lateral creditors, is the World Bank HIPC Trust Fund. This fund provides relief to eligible countries on debt owed to participating multilaterals and is administered by IDA, with contributions from participating multilateral creditors and from bilateral donors. The bank has made transfers from its IBRD net income and surplus to the HIPC Trust Fund to provide relief on debt owed to IDA.

Nevertheless, only part of the total expected debt relief on IDA debt under the initiative is currently funded. The 13th IDA replenishment, on which negotiations will commence this summer, will, therefore, have to make provision not only for donor financing of ongoing IDA lending, but specific provision will have to be made for donors to contribute further to the relief of existing IDA debt owed by HIPC countries.

Contributions to multilateral bodies, such as IDA and the World Bank, qualify as part of Ireland's overall contribution to overseas development in the context of the UN target of 0.7% of GNP.

The resources to be provided by IDA12 replenishment represent the principal means through which IDA pursues its poverty reduction strategies. IDA does not simply throw resources at the problem. It has developed a careful, thoughtful, financially sound and economically, socially and environmentally sustainable policy framework for poverty reduction. The main focus points in this poverty reduction framework are: investment in people; investment in economic growth for sustainable poverty reduction; support for good governance for broad-based poverty reduction and protecting the environment for the future.

Investment in people will be delivered through the support of the social sectors, principally in the following areas: education, health, population and nutrition, social protection, gender equality, labour and capacity building.

IDA has not only developed a suitable framework, it has also set out its strategy to translate poverty reduction objectives into country allocations. These allocations will be performance-based.

IDA also intends to increase its effectiveness in reducing poverty by: working with partners to tailor IDA programmes; the Poverty Reduction Strategy Paper process; continued support for the HIPC debt initiative and promoting employment generating, private sector-led growth. It will also establish clear goals to monitor progress and aid effectiveness. Monitoring will take place in the context of the international development targets for the 21st century and specific poverty reduction targets for specific countries of operation.

As IDA12 funding is rolled out, IDA will monitor progress through: poverty assessments; social assessments; poverty monitoring and analysis; periodic poverty papers and public expenditure reviews and analysis. IDA will also try to enhance effectiveness through openness and transparency in its own operations. Country portfolio performance reviews are planned as the implementation of the IDA12 action plan is unfolded.

It has been noted previously in the context of IDA replenishment proposals before this House that sub-Saharan Africa presents a particularly difficult development challenge. IDA will continue to make special efforts in this region, which has minimal access to alternative sources of investment capital, low social indicators and severe institutional and infrastructure constraints.

It is encouraging to note, however, that many of these countries are now pursuing sound policies and experiencing greatly improved growth rates, opening up a window of opportunity to improve the lives of their poorest citizens. The problem is that investment levels in these countries are too low to sustain this growth so substantial support from the international community, including both the public and private sectors, is still urgently required.

Under IDA 11, approximately 40% of IDA resources went to sub-Saharan Africa. In order to support African countries that are committed to poverty reduction, economic reform and sustainable broad-based growth, IDA intends to increase this share, with the aim of raising it to 50% of IDA12 resources as long as the performance of individual countries warrants it. During the recent replenishment negotiations on IDA12, Ireland fought hard to have the 50% target instituted as IDA's special focus on Africa is consistent with Ireland's ODA programme.

Deputies are well aware that high levels of external debt are a serious constraint to development for many low income countries. Why then does IDA assistance continue to take the form of loans, albeit on highly concessionary terms, rather than outright grants? Funding of IDA through donor replenishments accounts for only approximately one half of current IDA lending. The other half is accounted for very largely by repayments on previous IDA loans. A move to a system of grants, or to some mixture of grant and loan assistance, would ultimately require either a scaling back in IDA activity or an increase in donor contributions. In effect, the approach of increased donor contributions is the one chosen but it is being implemented through the HIPC initiative rather than within IDA itself, although, as I indicated, the 13th replenishment will have to address this matter directly.

IDA currently offers selective and limited grant funding. These grants are available under the terms of the HIPC initiative. At the finalisation of negotiations for the 12th replenishment, IDA had provided grants of US$75 million for an education project in Uganda, $150 million for economic reform in Mozambique and a $315 million grant was pending approval for Cote D'Ivoire.

In addition, IDA directors have recognised the unique problems faced by post-conflict countries, particularly in the immediate post-conflict phase, where quick action is crucial but where normal donor relationships either do not exist or have been disrupted by the conflict. IDA deputies agreed, in the context of a framework for post-conflict countries, that exceptional IDA grant funding could also be provided as a last resort where other funding sources are inadequate and where the use of IDA credits would be inappropriate. Such post-conflict IDA funded grants, if any, during IDA12 will, however, be very limited.

In relation to current IDA projects, it should be noted that because of their high grant element, IDA credits do not generally worsen borrowers debt service burdens at least in the shorter term, although they do not reduce them unless they are replacing non or less concessional financing.

Overall IDA assistance is positive, progressive and imaginative and is fully focused on meeting basic human needs and on raising the aspirations and potential of the poorest sections of humanity. It is not, however, sentimental. IDA assistance is now measured against the policy performance of the recipient countries. While neither IDA nor the World Bank group have any interest in taking control of the domestic policy-making process in recipient countries, the requirements of effective aid giving require that certain minimum standards are met in areas such as governance and the fight against corruption. To ignore these realities is to risk wasting resources which could be used to achieve real results in countries which are making serious efforts to improve their institutional capacity. Good governance is critical to sustainable, broad-based economic development and improvements in human well-being. Poor governance, including corruption, undermines the efficient and equitable provision of public goods and services and blocks opportunities for the poor and weak to benefit from the development process.

The key components of good governance are: good public sector management with accountable public institutions that give priority to productive social programmes and to policies designed to reduce poverty and support sound fiscal choices; transparent policy making and implementation; clarity, stability, and fairness in the rule of law; and openness to the participation of affected citizens in the design and implementation of policies and programmes that impact on them.

IDA has strengthened its analytical framework to assess the quality of overall policy performance in recipient countries, including governance factors, that will be applied in the allocation of IDA12 resources. Where weak governance is a big development constraint, the issue will be treated thoroughly in the country assistance strategy. IDA is fully prepared and equipped to render such assistance as is necessary to Governments which make serious efforts to address these problems

Ireland's membership of IDA was authorised by the International Development Association Act, 1960. Our contributions to the various replenishments have each been authorised by amendments to that Act. This Bill will enable us to make our contribution to IDA12. I, therefore, recommend the Bill for the approval of the House.

I welcome the Bill and say that Fine Gael support it. One of the greatest challenges facing the developed world is to provide a more prosperous future for the world's poor. The IDA is among the key multilateral institutions involved in this task and is specifically charged with responsibility for poverty reduction and the promotion of growth and development. Today, three billion people live on less than £1.56 per day and 1.3 billion people live on less than 78p per day. Some two billion people do not have electricity, 1.5 billion do not have access to safe drinking water and 115 million children do not receive schooling. These startling statistics are outlined in the explanatory memorandum. They give us an overview of the difficult task ahead of the developed world in facing up to this crisis.

The gap between rich and poor countries continues to grow. By the end of this year the number of people living in absolute poverty will have increased to 1.5 billion, a quarter of the world's population. As richer nations increase their share of global wealth, the real level of overseas aid they have given has fallen. It would seem that the OECD nations have decided to neglect the needs of people living in poverty, despite rhetorical claims to the contrary.

Conflict, natural disasters, low commodity prices and financial crises have decimated whole societies. In Indonesia 13 million people lost their jobs and real wages fell by between 40% and 60% as a result of the Asian financial crisis. In Brazil, half of those who rose out of poverty in recent years have now fallen back below the poverty line. The African continent is entering the new millennium with 44% of the population of sub-Saharan Africa – 250 million people – living on less than $1 per day. Despite the fact that sub-Saharan Africa contains the world's most impoverished and indebted nations, only one among its number, Mozambique, was included in the top ten recipients of official development aid in 1996-97.

If the globalisation of finance, labour markets, communication and commerce is inevitable, then the globalisation of rights and responsibilities must follow. The elimination of absolute poverty is achievable; the war against poverty itself eminently winnable. However, to do so it is vital that resources are channelled to practical poverty eradication efforts and to challenge the forces that create poverty. Many aid donors have implemented welcome policy improvements during the past year. Most donor Governments have declared that poverty eradication is central to their aid policy. Many also adopted a more coherent and transparent policy on aid and pledged to make aid more effective. However, the resources allocated by most donors fall far short of what is needed to realise this rhetoric.

Aid alone cannot eradicate poverty but it can contribute effectively to this goal where it is integrated into a comprehensive approach to development that addresses the inequalities between and within countries. Giving political priority to reducing poverty is meaningful only when equal priority is given to overcoming the causes of poverty. This includes addressing unequal access to education, information and decision making as well as material resources. The challenge for political leaders is to go beyond aid and work for deeper and more comprehensive approaches to intractable poverty.

Winners and losers in the globalisation race are inevitable but it is a fairly safe bet that the small elite and expanding middle class who set the rules of the race will be the winners and the vast number of poor people, mostly living in developing countries will be the losers. At the moment, key questions such as how to ensure that the process of economic globalisation enhances rather than reduces human security are barely being asked in global trade forums and Government ministries, let alone answered. It took too long for official donors to acknowledge that World Bank/IMF structural adjustment programmes have often left the most vulnerable worse off. The prescription of transparency and free market solutions being offered to poor countries share many characteristics with the structural adjustment models. Just as aid has been used to offset the social costs of structural adjustment, it now seems that it is being used to offset the cost of rapid globalisation.

The approach of donor countries to the burden of debt also illustrates the failure of political leaders to engage with poverty as an issue and to take into account the human impact of their decisions. The daily denial of education and health care to children in Africa, to pay debts for which they and their families have no responsibility to people and countries who are at worst comfortably off, is a fundamental injustice which cannot continue.

An increasing number of economists now suggest that income inequality inhibits growth and poverty reduction and that growth plus increased social spending may be an insufficient answer to poverty, where social, political and economic systems channel power and resources to those who already enjoy them. Aid needs to be spent both on interventions that benefit poor people directly and on supporting a wider policy environment for poverty elimination in which poor people can voice their interest. In both cases, the chain of causation between the spending of each aid dollar and benefit to poor people needs to be evident and plausible. To reduce poverty we need to address the cultural and social interests that sustain the unequal access to economic opportunity and social resources. Aid spending that aims to support the broad, pro-poor environment but fails to address these dimensions is unlikely to increase equality.

The independent review of poverty reduction and development assistance, The Reality of Aid, 2000 highlights NGOs' concern in all OECD countries that donors translate the improved poverty orientation of their policy into practice. The review looks at the performance of the various donors and makes an annual report.

In many of the world's poorest countries both coverage and quality of basic education have deteriorated in the past quarter century and gains made during the 1960s and 1970s have been wiped out. In developing countries 40% of children grow up without completing four years of primary school, the minimum needed to have a chance of acquiring basic literacy and numeracy. During the 1990s donors and Governments recognised the crucial importance of increasing access to basic education. The target the international community set itself for achieving universal primary education has already been shifted from the year 2000 to 2015. Even if the meaning of "education" was reduced to "enrolment" the prognosis on current trends is that an estimated 75 million children will still be out of school in 2015.

Donors and Governments could do much more to improve the strategic effectiveness of development co-operation as a catalyst for education reform. Increasing the volume and improving the poverty targeting of aid are part of what is needed to reinvigorate the "education for all" movement but of even more importance is harnessing the energies and capacities of civil society organisations as actors in the process of change.

I have received correspondence from concerned individuals to the effect that some of the large number of school books available because of major changes in the curriculum and the rate at which school books are being changed at pri mary and second level could be donated to Third World countries. Perhaps the Minister will consider this suggestion.

The biggest failure of education policy during the 1990s has been its failure to overcome the growing trend towards two tier education systems, one for the rich, another – under funded mismanaged and ineffective – for the poor. This is happening in Africa where there is a tier of education which is both advanced and sophisticated and another for the poor which is collapsing. When the state school system becomes a ghetto for the underprivileged offering neither economic opportunity nor self-respect and social inclusion, poor parents reject it while those who are not poor lose any stake in maintaining it. A coherent plan to make education serve the poor and marginalised better, requires, on the one hand, an enabling macro-economic environment and, on the other, a participatory and transparent national process of reform.

In a context of falling official aid, donors have referred to increased private investment as though this is an alternative. Growth founded largely on the influx of foreign capital without institutional reform or public policy designed to increase employment is not reliable. Between 1990 and 1997 foreign capital flooded into emerging markets. The flows of capital had barely begun to diminish as a result of the international financial crisis when we witnessed just how precarious and weak were the foundations underlying the macro-economic balance attained. Erratic short-term capital flows have led to volatility in developing countries.

As part of the effort to increase aid effectiveness and to focus on countries likely to show results a number of donors are reasserting their intention to concentrate official development assistance. Judging from recent data there is less, not more, concentration. In 1986-87 30% of aid was concentrated on the top 15 countries. This had fallen to 25% in 1996-97. Official development assistance to low income and least developed countries fell by US$3.6 billion or more than 12% in 1997. While it is true the share of total aid allocated to low income and least developed countries increased by one percentage point in 1997, the world's poorest countries with an average income of less than US$2 a day are receiving reduced amounts of aids. The percentages are lamentably low.

Allocation of aid to countries where poor people live may be a crude measure but it is also a fundamental first step on the road to poverty eradication. Aid can be a catalyst but its role is always going to be subsidiary to the major influences on poverty which include Government policy, economic and social stability, global trade and financial conditions as well as the efforts of poor people themselves.

Aid cannot be a substitute for other action. Richer countries cannot think that they are taking meaningful action on poverty if they provide aid but fail to address some of the structural inequalities which consign one quarter of the world's population to live in absolute poverty. Equally, poor countries should not focus only on the failure of OECD donors to meet their international commitments when reform of domestic policy is also an area of unfulfilled obligations. Aid must be seen by all Governments as a scarce and precious resource not to be wasted on projects that enhance the prestige or suit the convenience of the donor or recipient but have little relevance to the poorest people.

Another major trend in the 1990s which can be both positive and negative in terms of poverty elimination is the increasing integration of OECD Government approaches to aid, development co-operation, foreign affairs, trade and security policy. On the one hand, this improves coherence and, on the other, dwindling aid resources are being asked to do more and more each year. If one looks at some of the countries that benefit from the aid channelled directly from Ireland one will see that entire systems are collapsing. What is happening in certain African countries gives cause for concern. This is contributing to our refugee problem. Much more emphasis needs to be placed on good governance. To this end the explanatory memorandum states:

Good governance is critical to sustainable, broad-based economic development and improvements in human well-being. Poor governance, including corruption, undermines the efficient and equitable provision of public goods and services and blocks opportunities for the poor and weak to benefit from the development process. IDA has strengthened its analytical framework to assess the quality of overall policy performance in recipient countries, including governance factors (accountability, transparency, the rule of law and participation by civil society) that will be applied in the allocation of IDA 12 resources.

What is happening in countries such as Zambia brings this issue into focus. In providing funding IDA will have to stress the need to improve the democratic process and governance. The problem is that in countries which have benefited substantially from IDA assistance during the years, people do not want to relinquish power.

On the protection of the environment, large parts of Africa in which some of the most important ecosystems in the world are to be found have been destroyed through the over exploitation of timber and oil resources among others. Entire herds of wild animals and other species have been wiped out. The support available from outside has contributed to this. It is important that aid given by way of IDA helps promote environmentally sustainable growth.

I have already referred to investment in people and primary education is critical. As a nation which puts so much emphasise on education, we should stress to the IDA that we expect our money to be used to promote education pro grammes, particularly at primary level. Education is the solution to the problems of many Third World countries but there is a decline in the provision of quality education for poorer sectors in those countries.

There was reference to clean water and sanitation and preventative and reproductive health services. Nutrition is a very important issue because we see television images of large numbers of people obviously living on a poor diet. It is pathetic to see what is happening in many parts of Africa and Asia.

Fine Gael welcomes the increase in aid. As we become more prosperous there is a greater expectation that Ireland will provide even more aid. In the past, Ireland has always been very forthcoming and our NGOs have been to the fore in providing assistance in many parts of Africa and elsewhere. Missionaries still travel from this country to do great work in many under-developed countries and there is an acceptance here that we have an obligation to Third World countries. Even when times were tough and when the economy was not going well we fulfilled our obligations in various ways. This development continues that policy and we will have to look at expanding our policy in the future to provide greater resources to those countries that need our help.

I have had the benefit of a briefing from the Minister of State's officials, one of the curious effects of which is that one already knows the answers to most of the questions one proposes to put. I will not detain the House unduly on this issue but I support the Bill and the replenishment. We could usefully use the time available to look at overall Government strategy on overseas development aid and review the debate we had this time last year on the Bretton Woods institutions.

I could not help remarking to myself during Deputy Deenihan's contribution, the facility with which parties which would normally be of the centre or perhaps the centre right, produce seriously radical proposals when talking about the Third World. I do not mean this pejoratively but I assure Deputy Deenihan that I fully endorse his comments on tackling the power of the ruling elite, the need for the distribution of power and income and so on. Perhaps it might be useful if we could import some of that radicalism into what we do in this country.

I am glad the Deputy is reacting in that way to what I said. I come from a constituency with a powerful Labour Party Member of this House.

It is all about dialogue and debate. The statistics are stark and informative and little less than an indictment of our global order. About 20 to 25 years ago, when I was becoming politically aware, the North-South Initiative was instituted by Willy Brandt, Edward Heath and others and first brought to the consciousness of those in the north the need to engage in dialogue with the Third World and to radically redistribute resources between north and south, not only in terms of global social justice, if I can use that term, but also in terms of our own self-interest.

Twenty five years later it is worth taking stock and there are two central messages. The Minister of State is right to emphasise that there has been progress. In recent years there has been some evidence of donor fatigue, particularly when dealing with crises and natural disasters in the Third World. There is also greater cynicism when people view situations, in Ethiopia for example, where there is also armed conflict. In that context, it is important to emphasise that progress has been made and that aid does matter.

The Minister of State and Deputy Deenihan are right to say aid is not everything and that it does not solve the problem. In many ways, aid is merely an indicator of our engagement with and commitment to what is a major global issue. Nonetheless, it is important that people know progress has been made and that their dollars, euros or pounds are being well spent. However, it is also important that we acknowledge that a great deal remains to be done.

In some ways, some of the problems are getting worse and are being exacerbated, most noticeably in recent years, by the process of globalisation. Free trade has undoubtedly damaged the economies of some Third World countries who depended on cash crops and effectively maintaining a closed or relatively closed economy. Some of these countries depended, unsustainably, on artificially maintaining prices of commodities they produced and sought to exclude goods from other countries from their own markets. Much of that was unsustainable but the rate at which those barriers were dismantled and at which the global economy has become globalised has damaged the economies of some Third World countries and the sustainability of growth in those countries.

It is worth looking at our recent record on ODA. Deputy Deenihan is not quite right. We squeezed the ODA budget in the 1980s, along with everything else. We did not sustain that budget in the bad days. It was cut and was relatively slow to recover. The Minister of State will remember that during its brief period in office, the Fianna Fáil-Labour Government published a plan to increase the percentage contribution of GNP spent on ODA and that was successfully achieved during that Government's two years in office. This policy was continued during the two and a half years of the subsequent Government. Nonetheless, the progress brought our percentage contribution from about 0.21% to about 0.3%.

The present Government took office three years ago with a commitment to reach 0.45% but it seems certain that it is not going to reach that target. The Minister of State will argue that there has been a change in that GNP is calculated differently. However, this only tells part of the story. Unfortunately, it is clear that, two years ago, the Department of Finance effectively imposed cash limits on Ireland's ODA commitment rather than what, no doubt, it would have seen as an open-ended commitment to increase the percentage contribution at a time when GNP was increasing at a very fast rate. The Department thought it more sustainable or desirable to have a defined contribution in terms of the actual numbers of millions of pounds. The overall result is that, in terms of what we can afford, we are spending less and that is deplorable in current circumstances. If we cannot afford to meet the UN target now, then when are we going to be able to do so?

This year's current budget surplus is about £5,000 million, of which we contribute just over £200 million in ODA. Progress has been made. The absolute figures have increased and there is a commitment to increase them further. However, the reality is that we have made progress at a far slower rate than we could and should have done and that is deplorable.

I welcome the announcement, made a couple of weeks ago by the Taoiseach that the Government would look to meet the UN target by 2007. However, we are far too slow. We can do better than that, but at least there is a realisable commitment to meet the target at some point in the future and that in itself is a good thing. I am not suggesting we could simply meet the target overnight. Nobody would argue that we could usefully spend the money in the morning. It would be necessary to prepare the way with a sustainable plan negotiated in co-operation with the NGOs, many of which do sterling work in the Third World, but there is no reason that could not be done in a period of 18 months or two years rather than the period of seven or eight years being suggested by the Government.

Last year we had a useful debate on the issue of Third World debt and Ireland's contribution to it, the first such debate in a number of years. The Minister of State, Deputy Cullen, will recall that we made a contribution on a number of different levels regarding the reduction in Third World debt. Much of the debate in this House, certainly the controversial part of it, centred on the so-called enhanced structural adjustment facility. The difficulty was largely two-fold. It was and still is seen as a facility which is administered by the IMF and subject to many of the constraints and much of the influence which the IMF inevitably beings to bear. This debate is relevant to the International Development Association because the heavily indebted poor countries initiative, to which the IDA contributes, is dependent on a structural adjustment programme being agreed with countries which qualify for that. This involves the sort of structural adjustment programmes which are still effectively imposed by the IMF. Deputies on this side of the House argued that we should delay any contribution which Ireland might make until we see progress. There had been a number of studies, both internal and external, and there was a greater awareness of the need to improve the performance and availability of ESAF.

Before I came into the Chamber I read over last year's joint statement of the Ministers for Finance and Foreign Affairs. They pointed out succinctly the difficulties they saw at that time with the ESAF programmes. They talked, for example, about the need to place an emphasis on sustainable debt to take human as well as economic developments into account in drawing up programmes, the need for greater transparency, the need for speedier implementation of the HIPC initiative, the need to look at the social impact of the policies which were implemented by the IMF as well as the purely macro-economic impact, the need for greater consultation with local civil society and the need, in so far as it could be done, to work with local groups, governments and civil societies by contrast to the way in which things had traditionally been done, which is, to impose the IMF macro-economic template on individual countries in a way which in many cases has been shown to be inappropriate. I mention this statement now because I want the Minister of State, Deputy Cullen, to tell the House when he is responding to the debate the progress which has been made on all of these issues because the Minister for Finance, Deputy McCreevy, who took the Bill last year, stated that the Government was anxious to pursue all of those various issues in the period after Ireland committed money to ESAF, and I gather that has now been done by the Government.

I read the brief statement which the Minister, Deputy McCreevy, made last September at the joint annual discussion in Washington. It nodded in the direction of the debate which occurred six months previously in the House and the various concerns which were brought forward at that stage, but there is not an indication from the Minister's statement or anything I have read to suggest that significant progress has been made in opening up and reforming the operation of ESAF programmes in the way sought not only by us but by many other groups also.

On the issue of debt forgiveness and debt reduction, I am sure I speak for everybody in the House when I compliment the Jubilee 2000 Committee on the fantastic work it did towards the latter end of last year in gathering support, not just in Ireland but in many other countries, for an initiative largely from the richer countries to reduce the level of Third World debt. I welcome the agreement reached by the G7 in Cologne, when it agreed to effectively reduce Third World debt by an additional $45 billion over and above what had already been agreed as part of the HIPC initiative. Some have said that in many cases some of that debt was not being repaid anyway and that simply writing off debt which had effectively already been written off is not of great assistance, but nonetheless a reduction of $45 billion in the debt burden of the 41 poorest coun tries is a significant reduction and something to be built upon.

We all heard last autumn's statement of President Clinton when he effectively said that he would wipe out all of the debt owed by the poorest countries to the United States. It is not clear to me that that has happened yet. It would not be the first time that we have heard rhetoric from the US on this issue which has somehow or other run into the sand when it got near Congress. Perhaps the Minister of State, Deputy Cullen, can give us some indication of what is happening on that score. There has been a good deal of progress in the past 12 months at the level of the G7 and also within the European Union. We can be particularly happy with Britain and Germany, for contributing to the urgent international debate on this issue.

I support the Bill. My only concern about the International Development Association is whether this is the best way Ireland can contribute, for example, to the reduction of Third World debt. Part of what Ireland did last year was to make a specific bilateral contribution of about £13 million to Tanzania and Mozambique, two countries with which Ireland has a close working relationship. I wonder is that the more effective way to do this. I realise there is almost peer pressure to contribute to the international institutions and if one implies a knowledge of how to do it better, in a sense one will lose the argument. Nonetheless Ireland needs to stand back and consider whether we should take the bilateral route to debt reduction. If I had to choose, that would be my choice.

I gather that Ireland contributes not just specifically to the International Development Association and to what the IDA does but also to the World Bank Trust which effectively forgives debt owed to the IDA and, therefore, Ireland is coming at it from both sides. I wonder whether this is the most useful deployment of funds.

The issue of debt is the most urgent one which we can currently grasp and with which we must come to terms. Recently that came home to me clearly during the floods in Mozambique, a country with which Ireland has a special relationship which has made considerable political progress in recent years. It has a relatively stable government now and by the standards of Africa it is reasonably stable in macro-economic terms. Its inflation rate is around 10% and it has experienced low levels of growth over recent years, but all that was wiped out to all intents and purposes when the floods came. The country did not have the capacity to respond to that, partly because Mozambique's debt-service ratio is about three times GNP, which is utterly unsustainable and unpayable. If we wiped out the debt, we would be doing Mozambique and ourselves a service. If we were being clinical and honest about it, we would say that debt reduction and debt forgiveness is a moral political imperative but it also suits us because the debt overhang sucks liquidity out of the global economy. In effect, countries like Mozambique which could be engaged in global trade and the global economy are being forced out of that simply because they must spend so much of their export earnings and national income on debt reduction. That is not in their interests and neither is it in our interests.

We must look at the ways in which we make money available for overseas development aid. I some indication from the Minister of the reforms which we talked about last year and the progress which he has seen in that regard, but I support the Bill in principle.

Debate adjourned.