Michael Noonan
Ceist:36 Mr. Noonan asked the Minister for Finance the proposals, if any, brought forward on the rescheduling of Third World debt at the IMF meeting in Washington; and if he will make a statement on the matter. [19703/98]
Priority Questions. - Third World Debt.
There was no new proposal for Third World debt rescheduling brought forward at the annual meetings of the IMF and the World Bank in Washington. Rather the emphasis was on implementing and improving the mechanisms which have been put in place in recent years.
The principal instrument operated by the World Bank and IMF for alleviating the burden of Third World debt is the Heavily Indebted Poor Countries (HIPC) Initiative. The aim of the initiative is to ensure that the heavily indebted poor countries demonstrate a track record of sustained strong policy performance, are able to strengthen their poverty reduction programmes and permanently exit from future debt reschedulings.
This initiative was endorsed by the bank and the fund in September 1996. The initiative was designed to reduce the burden of debt for these countries to sustainable levels. Those institutions to whom the debt was owed would be called on to make proportionate contributions to reducing the burden of servicing the debt. The initiative called for participation by sovereign bilateral creditors as well as the multilateral creditor institutions. While it was open to bilateral creditors to contribute through debt forgiveness or rescheduling, the multilateral institutions would contribute mainly through financing debt service either from their own resources or through the contributions of their members, rather than through rescheduling.
Nine countries have so far reached a decision point on debt rescheduling. Of these, two were judged not to need assistance, and the remaining seven require assistance totalling about $6.1 billion in nominal debt service relief. The objective is to have all those countries which are likely to need relief in the process by the year 2000.
Ireland has welcomed the initiative and supported efforts to make it more flexible and inclusive, particularly in relation to adequate account being taken of countries' efforts to implement programmes and also of social as opposed to economic and financial criteria for qualifying for relief.
Earlier inclusion of countries or increasing the extent of relief will increase the cost of the initiative. The focus in Washington was to ensure that adequate funding was in place to implement the initiative and that those countries which could benefit from it had appropriate programmes in place by the year 2000.
I draw the attention of the House to the measures in support of Third World debt relief which the Government adopted last month. These have allowed Ireland to move from its advocacy role in relation to debt relief and become a direct contributor to the HIPC initiative. They will give Ministers increased moral authority to call for increased efforts by the international community to reduce the burden of debt on third countries to the greatest extent possible. The Deputy will see that this is precisely what I have done in my speech to the annual meetings.
When I drafted the question it was to ask the Minister for Finance the proposals, if any, he brought forward but the heat seems to have fallen through a crack in the floor during the process——
So long as I do not fall for the same practice.
——and I have got a slightly different answer. Will the Minister consider bringing forward proposals given that Ireland, through its development and missionary activities, has a strong record in third countries? Is the Minister aware that in Tanzania 40 per cent of people die before their 35th birthday? Is he also aware Tanzania spends six times as much on servicing debt as on the health services? Is he aware that 100,000 children die annually in Ethiopia from diseases that are easily preventable with a proper public health programme and that it spends four times as much on servicing its debt as on health services? Is he aware that in Zambia, which is debt ridden, servicing the external debt accounts for five times as much as total expenditure on education? In view of our strong record in these matters will the Minister take an initiative? The HIPC initiative was a cause for great rejoicing in 1996 but it is not as effective as anticipated by those who planned it. Will the Minister develop an Irish position to ensure that before debt is calculated an appropriate amount of funding is allowed to the domestic Government in order that at least minimal health and education services can be provided?
I am aware of the various points raised and of the Deputy's concern in this area. I noted before I went to the annual meeting of the IMF that he launched a Trocaire initiative. Last month I put forward a package which formed the basis of my speech in Washington — a copy of which I can supply to the Deputy — and I committed a total of £31.5 million to the most heavily indebted poor countries. Ireland has an excellent record in this area. This is a fresh initiative. In my speech at Washington I called for deeper debt relief if that was possible. I have told the Debt and Development Coalition which came to see me before going to Washington that I would not call for the absolute cancellation of debt. There is no hope of getting that through the international institutions nor would it be advisable. However, that does not preclude any individual debtor country from relieving, to the maximum extent possible, the amount of debt in these countries. Some people in the Debt and Development Coalition want to take that further step but it is neither pragmatic nor feasible. I do not know whether the Deputy advocates going that far.
I am calling Question No. 37. We have spent over six minutes on Question No. 36.
Legislation is needed to deal with the ESAF contribution. I hope to have that before Christmas.
I have called Question No. 37.