Michael Creed
Question:401 Mr. Creed asked the Minister for Finance his views on debt cancellation in respect of the IMF and the World Bank. [24724/00]
Written Answers. - Debt Relief.
Debt owed to the IMF and the World Bank by the most heavily indebted and poorest countries is being addressed through the HIPC initiative, which is being sponsored by the fund and the bank. While not cancelling all the debt, the initiative is intended to reduce it to sustainable levels to enable future growth and to free up resources for poverty reduction.
In addition to relieving the burden of this multilateral debt, the initiative involves parallel action in respect of outstanding bilateral debt. In the bilateral area a number of major creditors have announced their intentions to go further than is strictly required by the initiative and I have already publicly welcomed this stance. In Ireland's case, the House will be aware that we have provided assistance in grant rather than loan form and that cancellation does not, therefore, arise for us.
In my speech to the annual meetings of the IMF and the World Bank in Prague in September, I voiced my concern about the slow progress of the debt relief process. I also voiced concern at the lack of resources available to these countries for education and health programmes while large amounts must still be paid to creditors. I made special mention of the need for greater speed and more flexibility in implementing the HIPC initiative. I stated quite clearly that it is unacceptable for us to allow a situation where countries that are committed to good governance and tackling poverty reduction are, even after full HIPC relief, still spending a significant proportion of their budget on debt servicing.
I would like to assure the House that I support greater speed and flexibility in implementing the present initiative. It should not be forgotten that the aim of the HIPC initiative is to reduce indebtedness to sustainable levels and to give the countries concerned an exit from the debt treadmill. Any process which does not accomplish this needs to be further reviewed and specific remedial action taken in the case of identified deficiencies.