Ivan Yates
Ceist:86 Mr. Yates asked the Minister for Foreign Affairs the steps, if any, he has taken to alleviate the pressure on developing countries caused by debt. [18180/99]
Written Answers. - Third World Debt.
Brendan Howlin
Ceist:125 Mr. Howlin asked the Minister for Foreign Affairs the Government's views on the proposed cancellation of Third World debt as sought by the Jubilee 2000 Campaign. [17952/99]
John Gormley
Ceist:200 Mr. Gormley asked the Minister for Foreign Affairs his views on whether the G8 Cologne Debt Initiative package falls way short of the Jubilee 2000 demands; if he will make represen tations to other EU parties on this matter; and if he will make a statement on the matter. [18548/99]
I propose to take Questions Nos. 86, 125 and 200 together.
The burden of debt on developing countries, especially the poorest, is a serious challenge to the international community. The levels of debt repayment required of many heavily indebted poor countries far exceed flows of development assistance. It is not acceptable that the efforts of many of the most impoverished countries to achieve sustainable development are so constrained by the debt overhang.
I raised this issue in my recent address to the United Nations General Assembly. I stated that Ireland wishes to see the strongest possible link between debt relief and poverty alleviation. It is the poorest and most marginalised who have borne much of the burden.
In 1996 the Heavily Indebted Poor Countries Initiative was launched by the World Bank, the IMF and major donors specifically to provide debt relief for these countries in respect of their debts to the international financial institutions. However the criteria for debt relief were too stringent with the result that only a small number of the 41 countries classified as heavily indebted poor countries have qualified for relief.
At their meeting in Cologne in June 1999, the heads of Government of the G7 countries agreed on major improvements, including a relaxation in the qualification criteria, to the HIPC initiative. This should result in faster, wider and deeper debt relief. In addition the G7 agreed that bilateral creditors will grant up to 90 per cent relief on eligible debt. The financing of this enhanced HIPC is the focus of attention in the World Bank and the IMF at their annual meeting in Washington. The multilateral financial institutions will have to raise $13.3 billion to implement the initiative.
The enhanced HIPC does not amount to a full debt cancellation for heavily indebted poor countries. However, if implemented early and in full it will make a major contribution to easing the problem. It will be essential to ensure that the enhanced HIPC receives the finance it requires as soon as possible. We are sympathetic to proposals that, in addition to bilateral contributions, there should be a substantial EU contribution to the HIPC initiative.
The growing demand for full debt cancellation, such as the Jubilee 2000 campaign, is understandable in view of the impact the debt has on the poorest countries. The strength of international feeling on this issue is recognised and undoubtedly influenced the G7 in their decision to reform the HIPC initiative. Certainly debt cancellation should be explored by bilateral and multilateral donors whenever possible or feasible.
Full and absolute debt cancellation poses diffi cult and complex questions of both finance and policy. Many heavily indebted poor countries have made strenuous efforts to reform their economies to qualify for debt relief. Under the enhanced HIPC the debt of these countries should fall to levels which are sustainable and which do not drain resources from key social sectors such as health and education. This will be of immense benefit.
The creditor governments who will be called on to pay very substantial amounts in support of debt relief want to ensure that it has a positive impact on development. There is, therefore, a difficulty in considering debt relief, let alone cancellation, for countries whose economies are grossly mismanaged. In addition, other issues such as internal conflict, corruption and human rights abuses are also relevant in assessing debt alleviation.
Ireland is not a bilateral creditor of the developing countries. We strongly welcome measures, whether through debt relief or debt cancellation, which help relieve the burden. On a national level we have agreed to contribute funds of over £31 million to help ease the debt burden of heavily indebted poor countries. Bilaterally we have already contributed £9.5 million to debt relief in Tanzania and Mozambique, two priority countries of Irish Aid. We are also contributing £22 million through the World Bank and the IMF to the financing of the HIPC initiative.
The Government has also adopted a number of guiding principles on developing country debt. In addition to supporting reform of the HIPC initiative, the Government agreed to encourage the international community, including bilateral creditors, to take a generous and flexible approach to the heavily indebted poor countries. Both the Minister for Finance and I in our discussions in the EU and at the World Bank fully respect this principle. Together with other like minded countries we continue to press for greater efforts to be made, by whatever means, to resolve once and for all this challenge to development.