In 2005, the leaders of the G8 countries, at their Summit in Gleneagles, agreed to establish the Multilateral Debt Relief Initiative (MDRI), with a focus on the cancellation of the heavy debt burden on developing countries. It was intended to supplement the Heavily Indebted Poor Countries (HIPC) initiative which was launched in 1996 to reduce the debt burden of qualifying countries to sustainable levels.
The MDRI came into effect on 1 July 2006, and provides for cancellation of eligible debt from the World Bank, the African Development Fund and the IMF for many of the world's poorest and most indebted countries, most of them in Africa. In 2007, the Inter-American Development Bank agreed to provide similar debt relief to the five poorest countries in Latin America and the Caribbean. The overall aim is to relieve these countries from the burden of servicing debt and assist them in making progress on the UN Millennium Development Goals.
In September 2009, the World Bank and the IMF reported that debt relief provided under these international initiatives has substantially alleviated the burden on developing countries, aided by continued flexibility on the part of the World Bank International Development Association, which provides grants and zero-interest credits to the poorest countries. To date, debt relief has been delivered to 26 countries under the MDRI initiative. In addition, eleven countries have made good progress towards qualifying for this relief, and another six have been identified by the World Bank as potentially eligible. Despite this progress, some important challenges remain in order to fully implement the Initiatives. A key conclusion by the World Bank is that long-term debt sustainability ultimately depends on a country's broader success in building the institutions to support sustained economic growth. This must be an essential element in any poverty-reduction programme in developing countries.
Ireland is recognised internationally for the role we are playing in focusing on the reduction of global poverty and hunger and making international aid more effective for developing countries. We have strongly supported initiatives to ease or cancel the debt burden. Importantly, Ireland's bilateral assistance to the developing world is exclusively in the form of grants rather than loans. Ireland's share of the total cost of debt relief provided by the World Bank under the MDRI is €58.64 million. The Government contributed this amount in full in 2006. Ireland has also contributed over €20 million towards the cost of implementing the HIPC initiative.
The Government's debt policy strategy was prepared jointly by the Department of Foreign Affairs and the Department of Finance, and was launched in 2002. It supports the total cancellation of the debts of the world's poorest countries. A joint review of the strategy is currently being undertaken by the two Departments and I expect it will be completed within the coming months.