Vol. 549 No. 4
164 Mr. J. O'Keeffe asked the Minister for Finance his views on debt cancellation for Third World countries; and his further views on whether the rules applied by the IMF and World Bank have conditions of extending loans that are extremely severe and force policy options on Third World countries that undermine social and economic progress. [6928/02]
I consider that the HIPC initiative strengthened with the development of poverty reduction strategies is the best mechanism currently available to bring the debts of the highly indebted poor countries to a sustainable level. That said, I recognise, and have stated on several occasions, that the HIPC initiative in its current form may not provide many of the eligible countries with a permanent exit from unsustainable debt. I have, therefore, given my support to calls for further enhancement of the HIPC initiative, including additional funding on the part of donors, if the initiative fails to meet its stated aim. I have also publicly stated that the current concept of debt sustainability may need to be revised to take account of basic social needs.
Conditions imposed by international lenders are not intended to create harsh or impossible burdens. However, it must be pointed out that economic mismanagement, excessive spending on arms or other inappropriate strategies have led several countries into positions where external credit becomes impossible to obtain. The IMF and the World Bank seek to foster involvement by the debtor country in developing appropriate solutions. This, in itself, goes a long way towards alleviating the conditionalities which have often provoked resentment in the past.
Over two years have passed since the Poverty Reduction Strategy Paper, PRSP, approach was launched in September 1999. The early experience has been encouraging; the PRSP approach is beginning to take hold in many countries. Some 36 countries have prepared interim strategies. Five countries have completed their first full PRSP and are shifting their focus toward implementation. The bank, fund and a growing number of other development partners have intensified their efforts to support countries in formulating strategies and to use the PRSP as a basis for their own assistance.
Bank and fund staff are currently undertaking a comprehensive review of experience to date with the PRSP approach. The review will consider both the process and content of poverty reduction strategies, drawing on inputs from PRSP countries, civil society, and external partners. The review will include contributions from governments and individuals and civil society organisations in developing countries, aid donors, and international civil society organisations and other interested parties. The PRSP review, and a companion review of the IMF's poverty reduction and growth facility being conducted in parallel by the fund, will be presented to the executive boards of the bank and fund within the next few months.
One will see from this that both the bank and the fund are taking important steps toward giving developing countries charge of their own development programmes. While the bank and the fund support the preparation of the PRSPs, they are country-driven and country-owned.
