Written Answers. - HIPC Initiative.
Ivor Callely
Ceist:
30
Mr. Callely
asked the
Minister for Finance
the position regarding Third World debts; if he has satisfied himself on the progress of the heavily indebted poor countries debt initiative; if his attention has been drawn to deep concerns regarding the financial aspects of these debts and the financial institutions input; and if he will make a statement on the matter.
[9323/00]
Ireland is not a bilateral creditor of any of the world's poorest countries, nor a member of the G8. It is, therefore, as a member of the multilateral lending organisations, in particular the World Bank and the International Monetary Fund, that we can best exercise our influence to seek to contribute to easing the debt burden of these countries.
The HIPC initiative, driven by the World Bank and the IMF, is the official response to the need for debt relief, particularly at the multilateral level, but also involving substantial, if not complete relief, in respect of official bilateral debt. The initiative is clearly at a crucial stage in its development both in relation to its general implementation and its financing.
As originally conceived, the initiative aimed at both freeing the most heavily indebted poorest countries from the burden of the unpayable element of their debt, and offering them a definitive exit from the debt treadmill which is seriously undermining their development.
Following the recent review of the initiative, it has been substantially enhanced – the amount of debt relief on offer has been doubled, a wider range of countries is to get faster and deeper relief – and my concern now is that these improvements are fully financed.
I would remind the Deputy that Ireland was to the fore in calling for such improvements, in particular via the submissions made by my Department and the Department of Foreign Affairs to the review of HIPC which led to the improvements.
The total cost of the enhanced HIPC framework is estimated at $27.4 billion in 1998 NPV terms, $50 billion in nominal terms, for 33 HIPCs expected to qualify, excluding Liberia, Somalia, and Sudan, or more than double the total cost of $12.5 billion estimated for the previous framework. Given the magnitudes involved, decisions on the enhancements to the initiative have proceeded in parallel with agreement on additional financing for the IMF's contribution to the HIPC initiative, as well as that of other multilateral creditors, and the World Bank in particular. Under the enhanced framework, the shares of HIPC Initiative costs for bilateral and multilateral creditors are estimated to remain roughly equal. Overall costs to multilateral creditors are projected to rise to $13.3 billion under the enhanced framework, excluding Liberia, Somalia, and Sudan, from $6.2 billion under the original framework.
Ireland welcomes moves by the international donor community to address the external debt burden of the world's most heavily indebted poor countries and also the consequent effects of this burden on growth, development and poverty reduction in these countries. As a strong supporter of the HIPC initiative, Ireland contributed £12.1 million in 1999 to the debt relief package and is committed to payment of a further £2.9 million by 2008.
In my opinion the enhanced HIPC initiative is the only realistic mechanism through which multilateral debt relief for heavily indebted poor countries can be achieved. Successful and timely implementation of the enhanced framework would create an opportunity for further enhancement, which I would fully support and consider vital for future growth and development in HIPC countries. In this regard, I am particularly concerned that the number of countries processed to date falls short of projections under the enhanced HIPC framework and I am also somewhat disappointed at the amount of pledges to the HIPC trust fund that have been converted to paid-in contributions. Given these concerns, the Deputy can be assured that I will use my best endeavours to press for the full and speedy implementation of the HIPC Initiative, both in terms of the number of countries processed and also its financing.
Although I have concerns regarding the progress of the HIPC initiative, I see it as a suitable framework through which viable economic and social reform programmes, including debt relief measures, can best be achieved. In this regard the Deputy should be aware that Ireland is also pressing the multilateral institutions to ensure that programmes drawn up by HIPC countries take adequate account of the social needs of these countries. We are also supporting increased co-ordination both between the various institutions involved and with a wider spectrum of society in the countries concerned to ensure that aid, including debt relief, is used in the most efficient way to promote development and protect the social sector. These efforts are bearing fruit with the recent commitment of the multilateral institutions to target their activities in a comprehensive and co-ordinated way on poverty reduction, e.g. through the Poverty Reduction Strategy Papers, which will form the bedrock of the bank and the fund's assistance to IDA countries, and which will also inform the partnership between these institutions and the countries concerned. They will also be a key element in strengthening the link between debt relief and poverty reduction.
Deputies will recall that Ireland is contributing fully to the enhanced initiative. We are also participating in the alleviation of bilateral debt relief in relation to some of our priority aid countries even though our own bilateral assistance has been in the form of grants.
The HIPC initiative goes a long way towards tackling the issue of multilateral debt and poverty reduction. While it also envisages substantial reductions in bilateral debt, there is clearly scope for individual countries to go further on this and I am heartened by the indications that an increasing number of countries are prepared to do so. We have been advocating and supporting this development in our international dealings.
