Dáil Éireann díospóireacht -
Thursday, 25 Feb 1999

Vol. 501 No. 2

Written Answers. - Third World Debt.

Bernard J. Durkan

Ceist:

264 Mr. Durkan asked the Minister for Finance the suggestions, if any, he has made at EU or other levels regarding Third World debt; if it is recognised that current policy will continue to have a negative impact on poorer economies; and if he will make a statement on the matter. [5682/99]

Minister for Finance (Mr. McCreevy)

The most recent international meeting at which I spoke on this issue was that of the international Monetary Fund and World Bank in October 1998, which took place in Washington.

In my speech to the meeting, I stressed that the IMF and World Bank should seek to ensure that debt relief measures take full account of the social dimension, embrace widespread consultation in the countries in question, and encourage sustainable economic development.

I also argued for greater flexibility in the implementation of the joint IMF/World Bank HIPCs Initiative, as well as speedier implementation and application to as wide a range of the heavily indebted poor countries as possible. I pointed out that definitions of debt sustainability should be broadened to take human, as well as economic development into account and that the two recent evaluations of the ESAF facility make clear the need for the IMF to take full account of the social impact of policies in the design and implementation phases of macroeconomic and structural adjustment programmes. I believe that the most vulnerable sections of the community must be afforded special consideration, with safeguards against the most severe consequences of structural adjustment policies.

The Deputy will be aware of the Third World debt relief package which the Government adopted last September and which are now the subject of the debate before this Dáil on the passage of the Bretton Woods Agreements (Amendment) Bill, 1998. The measures in this Bill will allow 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 World countries to the greatest extent possible.

At EU level, the most recent initiative on debt relief was the package of proposals announced by German Chancellor Schröder in Cologne earlier this year. It represents a major move forward by the German Government of the debt relief issue. The package embraces a proposal for debt cancellation in regard to bilateral aid and commercial debts in the Paris Club. Ireland takes a positive attitude towards the package.

There is now clear evidence that the international community is actively engaging in the debt cancellation debate and is prepared to move forward from strongly held positions of the past.

Ireland will continue to press the international community, the IMF and the World Bank to provide the deepest possible level of debt relief to HIPC's countries who are prepared to engage in appropriate economic and social reform programmes. It must, however, be recognised that the degree of funding to be provided by donors is the critical determinant of the level of debt relief that will be made available in the final analysis.

At its meeting on 20 February 1999 the G-7 group of countries stressed the importance of improving the HIPC debt initiative and discussed proposals from a number of G-7 partners for achieving this, for example by reviewing the duration and the criteria for debt reduction. We very much welcome these proposals.