The purpose of this Bill is to enable Ireland to contribute £5,819,705 to the Fifth Replenishment of the Resources of the International Development Association, IDA. The funds are required so that the Association may be able to continue and expand its work of promoting the economic development of the less-developed countries.
IDA is a subsidiary of the World Bank and was set up in 1960 to provide loans on concessionary terms to the poorest of the developing countries. These concessionary terms consist of 50-year loans, with a ten-year grace period before repayments commence, the only charge being a service charge of ¾ per cent per annum. The need for this type of lending arose because the poorest developing countries find it very difficult to finance their development programmes on ordinary commercial terms. Even when commercial finance is available, it places a serious burden on their debt-servicing capacity. The Association's lending is concentrated on those countries with a gross national product per capita of less than £300.
The Association is managed by the President, Robert McNamara, reporting to a Board of 20 Executive Directors elected by its 117 member countries. Policy matters are decided by the Board of Governors, there being one Governor for each member. Both of these Boards have the same membership as the World Bank and the International Finance Corporation, the other bodies in the World Bank Group.
IDA's membership of 117 is divided into 21 Part I or developed countries and 96 Part II or developing countries. Its resources, amounting to almost $12 billion, come from initial subscriptions, three-yearly replenishments and transfers from the World Bank. The bulk of these resources are provided by the three-yearly replenishments, to which the Part I countries are the main contributors. There have been four such replenishments to date, the last one providing IDA with almost $4.2 billion for the period July, 1974 to 30th June, 1977.
Ireland is a founding member of the Association, having contributed £1.15 million to its initial capital as a Part II member. We did not contribute to the First and Second Replenishments, but we did agree to make a special contribution of approximately £2½ million to the Third in 1970. In 1973 Ireland became a Part I member, because of the substantial economic progress made during the sixties, and contributed £3.1 million to the Fourth Replenishment.
In March of this year, representatives of the 21 Part I countries and five Part II countries, consisting of the Republic of Korea, Saudi Arabia, Spain, United Arab Emirate and Yugoslavia, agreed to a Fifth Replenishment equal to $7,638 million for the three-year period beginning 1st July, 1977. This is of course subject to legislative approval in the individual donor countries.
It was agreed in the negotiations that traditional donors, that is, those who had contributed to previous Replenishments, would provide $7,200 million of the total, an increase of 60 per cent over the original amount promised in the Fourth Replenishment. Because of the depreciation of the pound vis-a-vis the dollar in the intervening period, this would have meant a contribution by Ireland of £7.1 million, an increase of 130 per cent over our previous contribution. This was obviously unfair, and a final figure of £5.8 million ($10 million) was agreed after bilateral negotiations.
Agreement to contribute this amount does not mean that it will actually be paid over the three-year period of the Replenishment. Instead, non-negotiable, non-interest bearing demand notes will be deposited with IDA, who will call cash payments as and when the projects which are being financed by the Fifth Replenishment require the funds. In effect, we will pay the £5.8 million over a period of six-nine years.
The resolution authorising the Fifth Replenishment was approved by the Board of Governors on June 16th of this year. Contributions fall due 30 days after members, including 12 Part I countries, whose contributions amount to not less than 80 per cent of the total Replenishment, formally notify the Association of their intention to take up their allotted subscription. The present position is that 34 countries, including 13 Part I countries, with contributions amounting to 43 per cent of total commitments have already done so. Notification by the United States is likely to be given shortly and the Fifth Replenishment will then require notification from just one other major country to become effective.
This Bill, if enacted, will enable Ireland to participate in the expansion of crucially important concessional assistance to the poorest developing countries. There are 750 million human beings trapped in absolute poverty, whose condition of life is beneath the level of human decency. This is a tragedy of ghastly proportion when one thinks of the resources available, and the sophistication of modern technology. The IDA has become the international community's primary weapon against the worst forms of poverty, and the size of the Fifth Replenishment is evidence of the support it receives. The fact that Irish contributions to IDA take up well over 10 per cent of our total annual spending on official development assistance speaks for itself, and the proposed contribution of almost £6 million enables us to demonstrate our continued support of the Association.
I recommend the Bill to the House for adoption.
