Dáil Éireann díospóireacht -
Tuesday, 25 Nov 1997

Vol. 483 No. 3

Adjournment Debate. - Highly Indebted Poor Countries Initiative.

Mr. Flanagan

I thank the Ceann Comhairle for allowing me raise the matter and the Minister of State for giving his views. I also thank the Minister, Deputy McCreevy, for his lengthy reply to a parliamentary question I tabled last week. Unfortunately, I was unable to put some questions to the Minister then but I am glad to have the opportunity to do so now.

The Minister's address to the AGM of the International Monetary Fund in Hong Kong in September was a missed opportunity to raise the stakes on the debt initiative which applies to the highly indebted countries of the Third World. While he referred to the initiative, he did not take on the position of leadership which Ireland should show in this matter.

As a small neutral country, we have a significant role to play. We have a positive role because of our proud membership of the United Nations and the fact that we do not carry the political baggage of non-neutral countries on the world stage. Our neutral status gives us an element of objectivity when dealing with international affairs.

We have a very proud tradition of overseas aid. Many of the worthy projects undertaken by Irish aid workers in HIPC countries are a positive indication of our role on the international stage. We have come a long way as a State from the days of collecting pennies in schools for the black babies of the Third World. We should follow through on that good work by taking the initiative on this HIPC issue.

There is a lack of political will on the matter. We should apply political pressure on the appropriate financial institutions to move faster on the debt question. Our overseas aid to Third World countries is in the form of non-repayable grants rather than loans. We should look at the agencies which are issuing loans to Third World countries at very high interest rates.

The IMF is not without blame in the matter of Third World debt. On many occasions it encouraged poor countries to borrow, resulting in the present crisis. Many of those IMF loans were advanced to corrupt regimes. It advanced $1 billion to the former regime in Zaire, which is regarded as one of the most undemocratic and corrupt in the world. That money must now be repaid with interest. I hope some credit will be given to the changed Administration in Zaire and the efforts being undertaken to improve the democratic structures. Creditors must take their share of the responsibility for the formation of this debt crisis. It is not morally sustainable to allow creditors walk away from their actions and mistakes.

Ireland is a small country with a small but real voice. We should call for the inclusion of social development indicators in the debt sustainability analysis. All of the HIPC countries should receive notices of debt reduction by the year 2000. I am sure the Minister of State, Deputy Cullen, is aware of the petition Jubilee 2000, signed by thousands of citizens in every part of the country, calling for action on this debt to ensure that, by the end of the century, the low income countries can have a little more to look forward to than at present.

Mr. Cullen

I thank Deputy Flanagan for raising an important issue and one in which I have a personal interest. Ireland has been a supporter of the Highly Indebted Poor Countries Initiative from its earlier stages to the protracted and difficult process of the negotiation of its terms. In the implementation of the HIPCS the Government is concerned that the initiative should offer a real exit from excessive debt to the countries concerned and allow them to regenerate their capacity for economic and social development. Ireland has, therefore, sought to ensure that, under the terms of the initiative, the number of beneficiary countries should be maximised, the level of debt relief to be delivered should be as generous as possible, expeditious decision making and implementation should drive the process and flexibility and pragmatism should inform each decision.

The Minister for Finance is Governor for Ireland at the IMF and the World Bank and has put these Irish concerns on the record of their annual meetings. The Government believes that both Bretton Woods institutions should be congratulated on the progress that has been made on the implementation of HIPC.

At this point, three countries have been approved for debt relief. The first country to benefit financially will be Uganda, with a total package valued in nominal terms of more than $700 million. The package, which is to be delivered by April 1998, will reduce Uganda's debt to a sustainable level. The completion of the package has been warmly welcomed by the Ugandan Minister of Planning and Economic Development who described it as very welcome for all Ugandans.

Bolivia and Burkina Faso have also qualified for assistance under the initiative, with final decisions expected soon on Cote d'Ivoire, Mozambique and Guyana. Thirteen other countries are expected to qualify in due course.

Much comment on the debt initiative has focused on the structural adjustment necessary to underpinning economic reform. In our view, such adjustment is a necessary step on the road to economic and social sustainability. Ireland's experience from the middle 1980s to date shows the benefits to be derived from making the necessary economic adjustments, however difficult these may be.

The Government considers it imperative that economic development programmes prepared with the assistance of the IMF and the World Bank should take into account the impact which the adjustment process has on the poorer sectors in society and should be framed so as to mitigate undue hardship.

In recent years the IMF and the World Bank have given much higher prominence to human resource development and social sector issues. There is increasing evidence, both in their literature and their actions on the ground, to suggest that these ideals have been internalised within the culture of both organisations. The Government is especially pleased to note that the Government of Burkina Faso has, in the context of the debt initiative, committed itself to ensuring that the funds released as a result of the debt relief will be used to strengthen social development programmes.

It is widely recognised that this debt burden has been a major factor in curtailing the development of the poorest and most heavily indebted countries. The Government believes that economic development offers the best prospect of a real and sustained alleviation of the poverty which affects such large segments of society in these countries. Reliance on any one measure on its own is not likely to produce long lasting results or the impact required for sustainable development. The debt initiative must, therefore, be regarded as but another, albeit important, instrument in the armoury of the multilateral doner community in the fight against poverty. It would be unwise to burden the debt initiative with the sole responsibility for poverty reduction.

I remind the House about the Government's position in regard to contributing to ESAF. The enhanced structural adjustment facility is the vehicle by which the IMF channels its share of relief to beneficiary countries under the debt initiative. Any decision to proceed with an Irish contribution to ESAF will be taken in the light of the findings of the external evaluation of ESAF which is currently under way and the IMF's response to it, particularly in regard to the social sector conditionality.

As I stressed, in its involvement with the debt initiative Ireland remains committed to ensuring it provides a genuine exit from debt to beneficiary countries and that in its implementation the burden of adjustment does not bear down unduly on the poorer sections in society.