The purpose of the Bill is to authorise a voluntary contribution of £6,230,000 by the Irish Government to the Sixth Replenishment of the resources of the International Development Association.
The International Development Association was founded in 1960. It is one of the organisations that make up the World Bank Group—the others are the World Bank itself and the International Finance Corporation. In effect, the association, which has 122 member countries, is a special fund administered by the bank. The President and staff of the bank are in charge of the day to day running of the association. They report to an Executive Board which is elected by the member countries. Major policy matters are decided by the Board of Governors of the association, each member country electing one Governor.
The association caters for the poorest of the developing countries. These include countries such as India, Bangladesh, and countries in sub-Saharan Africa. Nearly 90 per cent of the association's lending goes to countries with an average annual per capita income of £100 a year. In some cases the average would be even less than this. Masses of people in these countries would, in fact, be subsisting on incomes of one-third or one-half the national average. Within these countries the association concentrates on lending for projects which have a direct effect on the living standards of the poor. Thus, 46 per cent of the association's lending in recent years went on agricultural and rural development. Agricultural and rural development projects undertaken in 1978 and 1979 are expected to directly benefit about nine million rural families. The rest of the association's lending is devoted mainly to basic infrastructural, industrial and urbanisation projects.
Although the association's projects are aimed at the poorest section of the world community they are nevertheless required to meet appropriate economic and financial criteria; they are supervised carefully to ensure the greatest efficiency in the use of resources and, after their completion, the projects are fully evaluated with a view to improving the association's future project work. It is accepted internationally that the assocition operate very high financial control and auditing standards.
The conditions attaching to the association's loans are highly concessional—repayment over 50 years, 10 year grace periods before repayments of principal begin and no interest. There is an annual service charge of three-quarters of 1 per cent on the disbursed portion of each loan. The service charge is intended to cover administrative costs. The World Bank itself, by contrast, lends on essentially commercial terms and the International Finance Corporation also provide equity and loan finance on an essentially commercial basis.
The concessional nature of the lending undertaken by the association is made possible by the grant-type resources which are made available to it. To date these resources comprise, in round figures, initial membership subscriptions amounting to $1 billion, transfers from the surplus income of the World Bank of $1½ billion and nearly $18½ billion from periodic replenishments provided by its richer member countries. The funds for these replenishments have come traditionally from almost all the developed countries—the Part I countries as they are known in the Association. All the members of the EEC and many other European countries participate; also, for example, the United States, Canada, Japan and Australia. There are as well a number of OPEC contributors and, in recent years, an increasing number of better-off developing, or Part II, countries. The latter include Argentina, Brazil, Korea and Yugoslavia. In all, about 33 countries are expected to contribute to the current Sixth Replenishment.
Ireland joined the association on its foundation in 1960, and subscribed $3 million to its capital. This country did not contribute to the first or second of the three-yearly replenishments of resources, but made a contribution of $4 million to the Third Replenishment as a Part II member. Ireland became a Part I member in 1973, because of the economic progress which had been made over the previous decade, and because of our membership of the EEC. It was accepted that this would involve a continuing commitment to participate in future replenishments. As a Part I member, Ireland contributed £3.1 million to the Fourth Replenishment and £5.8 million to the Fifth Replenishment.
Negotiations on the Sixth Replenishment began at the end of 1978 and concluded towards the end of 1979. The negotiations agreed on an overall amount of $12 billion for the replenishment. This represents an increase of 55 per cent in US dollar terms over the amount of the Fifth Replenishment. The vast bulk of the funds will be provided by Part I countries. The basic principle followed in the allocation of contributions among these countries was that each would maintain in this replenishment the same share as it had taken in the Fifth Replenishment, with a number of exceptions in the case of some major contributors. The allocations have been made on the understanding that commitments to them are not final until approval has, where necessary, been obtained from the legislature of each donor country. The outcome of the Sixth Replenishment negotiations, which is generally regarded as successful, has been approved by the association's board of governors. The replenishment will enter into force when member countries contributing about 80 per cent of the total replenishment formally notify the association that they will pay their allocated amounts.
Donor countries have, as heretofore, the right initially to substitute nonnegotiable, non-interest-bearing demand notes for cash payments. The notes are to be deposited over the three years 1980 to 1982. Actual cash payments under the replenishment will arise over the years 1981 to 1990. The precise rate at which the funds are called upon depends on the progress made in implementing the projects financed by the replenishment.
As a Part I member of the association, Ireland is, as I have said earlier, expected to participate in the periodic replenishments. In accordance with the sharing arrangements agreed in the negotiations the Government has indicated that, subject to legislative approval, it is prepared to contribute the amount appropriate to Ireland, that is £6,230,000. The association's management has indicated its appreciation for this undertaking and for the helpful part that Ireland has played in the negotiations. Contributions to the association are regarded as official development assistance.
Ireland's membership of the association is covered by the International Development Association Act, 1960. As in the case of earlier replenishments the Bill now before the House makes provision, by way of amendment to the 1960 Act, for our contribution to the latest replenishment. The proposed amendment also brings together the earlier payments provisions in the 1960 Act and those inserted by the subsequent amending Acts.
This Bill, when enacted, will, therefore, enable Ireland to maintain its role in helping to finance the work of the International Development Association and, through it, to continue to help alleviate the appalling conditions in some of the poorest developing countries around the world.
I recommend the Bill for the approval of the Seanad.