The purpose of this Bill is to authorise a voluntary contribution of £3,100,070 towards the fourth replenishment of the resources of the International Development Association (IDA), one of the World Bank group of organisations. This replenishment is necessary to permit the association to continue to approve credits for projects in underdeveloped countries after June, 1974, when the resources at present available to it are expected to be fully committed.
On the formation of the association in 1960, Ireland became a member and subscribed £1,147,022 to the capital. This country also made a voluntary contribution equivalent to more than £2 million, at present exchange rates, towards the previous replenishment. This contribution was expressed in 1960 dollars and was authorised by the International Development Association (Amendment) Act, 1971. We are required to adjust the amount to take account of changes in exchange rates. The initial capital subscribed and £250,000 of the voluntary contribution have been released at the association's request for financing of expenditure in eligible member countries. The remainder will be drawn down over a number of years proportionately with drawings of money provided by other contributing countries.
The association was established to provide credits on easy terms to the poorest and least developed member countries, in practice those with an annual per capita income of less than $300. These credits are repayable over 50 years and are subject to an interest charge of only ¾ per cent per annum to cover administration expenses.
IDA is the oldest and most experienced international institution providing aid for developing countries on concessionary terms and assistance in institution building. For the most part funds are provided for specific projects and great care is taken to ensure that the money is used to the best advantage. It is the policy of the association to give the largest measure of support to efforts towards economic and social structural adjustment aimed at a more equitable distribution of income and opportunities. If it is to continue this vital role, it requires an assured and increasing volume of financial resources.
IDA membership is divided into two groups. The original part I members were those industrialised countries which subscribed in gold or freely convertible currencies more than three-quarters of the initial capital of $1,000 million. Part II countries subscribed the balance but only 10 per cent of their subscriptions was payable in gold or freely convertible currencies, the remainder being payable in non-convertible national currencies. A small number of the original part II countries, including Ireland, later agreed to the release of their 90 per cent portions in freely convertible form. There are now 21 part I and 92 part II members. In general, part I countries provide the resources of IDA aid and the poorest of the part II members are the recipients of the aid.
In view of the substantial economic progress of this country since 1960 and the fact that EEC countries, except Ireland, are in part I the Government decided recently that the time had come to apply for part I membership. Having made available our full initial capital subscription in freely convertible currency some years ago and having contributed on a voluntary basis to the previous replenishment of the resources of the association this country had in fact, though not formally, assumed the obligations of part I membership. Our application for the formal change in status, which has been approved, represents a clear indication of the Government's intention to play its part in providing aid for the more needy peoples of the world. It involves a moral commitment to contribute towards the financing, through the association, of the social and economic development of the more impoverished countries. The commitment is of a voluntary nature and contributions are negotiable with the association, in the light of the prevailing overall economic situation.
The lending operations of the association have been financed mainly by the initial capital subscriptions and by special replenishments of its funds on three occasions. The first and second replenishments covering the period to 1971 were provided by part I members and by a long-term loan from Switzerland, a non-member. Contributions towards the third replenishment, covering the period 1972 to 1974, were made by part I members and three part II members—Ireland, Spain and Yugoslavia. There was also a Swiss loan and a voluntary contribution from New Zealand, a non-member, which has recently applied for part I membership.
Following consultations between the association and the contributing countries, including Ireland, agreement has been reached on a fourth replenishment of $1,500 million a year for three years, subject to the necessary legislative authority being given in the participating countries. There was general support for the view that an annual amount of about $1,140 million in 1975 would represent the same constant effort as the annual contribution of $800 million, in 1960 dollars, to the third replenishment— that is, if part I countries made contributions at that level, they would contribute exactly the same percentage (0.035 per cent) of their GNP in 1975 as in 1972 and that an increase above this level was justified by the growing needs of the poorest countries for these resources. Our proposed contribution to the fourth replenishment, equivalent to $7.5 million, represents about the same proportion of the total as on the previous occasion,
The executive directors of the association have recommended the governors, representing all member countries, to vote by 31st January, 1974, on a resolution to give effect to the proposals. As governor of the association for Ireland, I propose to vote in favour of the resolution. This will not become effective and the obligation to contribute new resources will not become binding on any member, unless and until members, including at least 12 part I members, whose contributions aggregate not less than $3,500 million, give the association formal notification that they will make the contribution authorised for each of them.
The Bill, if enacted, will enable this country to continue to assist in the valuable work of IDA in fostering the improvement of the economic and social welfare of the very poorest countries. The Bill was supported wholeheartedly and without reservations in the Dáil and I feel sure that the support of this House will be no less enthusiastic.
I recommend the Bill for the approval of the Seanad.
