Dáil Éireann díospóireacht -
Wednesday, 5 Dec 1973

Vol. 269 No. 8

International Development Association (Amendment) Bill, 1973: Second Stage.

Minister for Education (Mr. R. Burke)

I move:

"That the Bill be now read a Second Time."

The purpose of the Bill is to authorise a voluntary contribution of £3,100,070 towards the replenishment of the resources of the International Development Association (IDA), one of the World Bank group of organisations.

The association was established in 1960 to provide credits on easy terms to the poorest and least developed of the member countries, in practice those with an annual per capita income of less than $300. These credits are repayable over 50 years and subject to an interest charge of only ¾ per cent per annum to cover administration expenses.

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, the poorest of the part II members being the recipients of the aid.

IDA is the oldest and most experienced international institution providing financial aid on concessionary terms and assistance in institution building. For the most part the 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.

Since its foundation, the association has 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 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.

The resources made available to the association, amounting to £17,242 million since its inception, are expected to be fully committed by June, 1974. Following consultations between the association and the contributing countries, including Ireland, agreement has been reached on a fourth replenishment of $4,500 million subject to the necessary legislative authority being given in the participating countries. This would cover commitments in the three years commencing July 1974, but disbursements would be over a much longer period.

Ireland's contribution to the third replenishment was $4 million, out of a total of $2,400 million, and this was authorised by the International Development Association (Amendment) Act, 1971. 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. In view of the substantial economic progress of the country since 1960 and the fact that EEC countries, except Ireland, are in part I, the Government decided that it was no longer appropriate that we should continue as a part II member and that part I membership should be sought. Our application for this change in membership status, which has been approved, is a concrete indication of the Government's intention to play its part in providing for the most needy peoples of the world. It involves a continuing moral commitment to contribute towards the financing, through the association, of the social and economic development of the most impoverished countries. The commitment is of a voluntary nature and contributions are negotiable with the association.

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 participate financially in the excellent and most desirable humanitarian work of IDA and I feel sure that all Deputies will support these objectives wholeheartedly.

I recommend the Bill for the approval of the House.

Mr. Colley

As far as this party are concerned, the Minister may rest assured that we support the objectives of this Bill and of the International Development Association wholeheartedly and without reservation. As is generally known, the International Development Association is an offshoot of the World Bank and works very closely in consultation with it and, indeed, shares offices and staff to a great extent. I understand that very often an aid programme for an under-developed country includes a package deal, partly assistance from the World Bank and partly assistance from the International Development Association.

One of the reasons why we can support this association and its activities wholeheartedly is that it represents, perhaps, the least self interested form of assistance to under-developed countries that is available. I say that because it is operated on a multilateral basis and there are no strings attached as far as the contributing countries are concerned. One frequently hears comparisons made between the amount of aid given by one country and another on the basis of, say, a percentage of GNP and there are other bases of comparison used. These bases should be examined very carefully before they are accepted because very often one finds that in the case of some countries which appear to be performing very much better than other countries, and than Ireland in particular, the truth of the matter is that a great deal of the aid they give is not aid without strings on a multilateral basis but rather aid given on a bilateral basis which, in the crudest form, can consist of simply disposing of surplus stocks which the donor country has and in a somewhat more sophisticated form can consist of credits, the making of money available on condition that that money or a large proportion of it is expended on the purchase of goods from the donor country.

I suppose there is no doubt that from the point of view of the recipient countries it is better to have this kind of aid than none at all. Nevertheless, inherent in that kind of aid is something that is very akin to economic imperialism. It is certainly not in any way as attractive or as laudable as the kind of aid that is involved in this Bill and in our participation in the International Development Association. It is very important when one hears comparisons between, say, this country's performance and another country's performance in regard to aid to developing countries to analyse the form of aid that is given. When one does this and relates to official aid given by the Government of each country and confines it to this kind of multilateral aid without strings attached, one then finds that our performance is by no means bad in relation to that of other countries who are in many cases in a better position to give assistance than we are. That is one of the reasons why we can support without reservation the proposals in this Bill.

Another reason is that to the best of my knowledge the International Development Association schemes are well administered. Certainly as compared with many other international schemes they seem to be well administered, confined to countries really in need and given on terms which are really worthwhile to the recipient countries and, perhaps, most important of all, are directed in the main to the kind of economic development in the recipient countries that will lead to those countries becoming more self-sufficient in the future and not merely directed to ad hoc remedying of particular problems. This, of course, is necessary in any long-term approach to aid to developing countries. There are problems which arise from time to time which do need ad hoc remedies but any long-term approach to aid to developing countries must be on the basis that the aid is directed to enabling the recipient countries to help themselves.

For all these reasons we are fully in support of this Bill. There are, however, one or two matters that I would like to mention to the Minister and, perhaps, when he is replying he could clarify the position in regard to them. I wonder if I am right in assuming that the decision to become a part I member was influenced, to a great extent, by the fact that we had, in practice, almost become a part I member because although we were only bound to pay 10 per cent of what we had committed ourselves to we did, in fact, in the past agree to release the other 90 per cent and to a great extent this practice put us into a part I category. I know there are some other obligations involved in being a part I member but I should like to know whether the Minister would agree that that was an important factor in deciding to become a part I member.

For a number of reasons I support the decision to become a part I member not least of which is the fact mentioned by the Minister that we are the only member of the EEC that is not in that category. It would help if, when replying, the Minister could give some indication of the likely commitment now and for the future for this country by reason of being a part I member, not only in relation to the present subscription which is being required but on the basis of the pattern of growth in the IDA. I realise that any assessment in this regard must of necessity be tenuous but it would be of some help to have even a tenuous estimate of what rate of growth is likely to be involved in our contribution.

Another matter on which I would appreciate some clarification is in relation to the contributions we have made already and the contributions to which we are committing ourselves on foot of this Bill. The figures which the Minister quoted in his speech are in dollars. This is the normal procedure in dealing with this association but the figures in the Bill are in sterling and since it is not clear to that extent I would appreciate the Minister giving us in sterling the amount of the commitment which we made originally in 1960, the amount of the initial commitment made under the 1971 Bill, the amount of the commitment being made under this Bill and also the amount of the actual payments we have made up to now on foot of the previous commitments and the amount of the payment we propose to make on foot of this Bill. I think from what the Minister said that what is involved in this Bill is a commitment to pay the full amount now and not as happened originally, that was to pay 10 per cent and leave oneself ready to pay the other 90 per cent when called on.

In conclusion I reiterate that, subject to clarification of the points I have raised, we support the Bill fully, a Bill that arises from a further request from the IDA to the member countries to subscribe further so as to enable the association to continue with an ongoing programme of assistance to underdeveloped countries. When this party were in Government in 1960 we accepted the necessity of becoming members of this association. By reason of the Bill of 1971 we accepted the necessity for stepping up our contribution. The Bill before us is in pursuance of the policy we were following. We support it without reservation.

Mr. R. Burke

I thank Deputy Colley for his attitude to this Bill, a Bill which commands the support of the House generally. As the Deputy pointed out, since the setting up of the IDA in 1960 we have been part II members which, as I indicated in my opening speech, includes the less industrialised countries like ourselves and the developing countries. At that time it was accepted readily that because of our 1960 state of economic development we could not do other than accept part II membership. At that point in time we were not ready for part I membership.

Part I members provide the association's funds while the poorer part II members are the recipients. Membership of part I means a moral commitment to contribute to the resources of the IDA. The level of contributions by all members, part I and those in part II who are prepared to participate, is negotiable with the association in discussions prior to each replenishment. The contribution normally is related to a member's share of the combined GNP of the participating countries. With the considerable economic progress in Ireland since the 1960's the question of transferring to part I membership has arisen from time to time. In the 1971 replenishment we participated on a voluntary basis to the extent of $4 million. Whether we were part I or part II members participation in future replenishment would be expected of us. The change to part I membership does not involve any extra commitment in this replenishment beyond what we would have contributed on a voluntary basis had we remained part II members. Also, at present we are the only EEC member country in the part II membership group. Therefore, I think Deputy Colley will appreciate that a combination of those factors—our economic progress since 1960 and our membership now of a progressive economic group in the EEC—has made it necessary for us to transfer to part I membership.

Part I membership entails a definite moral commitment, a definite obligation to support future replenishments. The discussions with the IDA regarding the level of the contributions were dominated by that association's concern not to burden countries beyond that which their resources would permit. This should mean that for future replenishments a fair contribution, in the light of our circumstances, would be negotiable.

The figures in sterling for earlier contributions are bound up with changes in currencies. Perhaps it will be possible for the Minister to give these figures in the Seanad or communicate privately with Deputy Colley in regard to these points.

Question put and agreed to.

Agreed to take remaining Stages today.