The purpose of the Bill is to authorise a contribution of £20 million by the Irish Government to the twelfth replenishment of the resources of the International Development Association.
The International Development Association, IDA, is an affiliate of the World Bank. It is one of the bank's main instruments in the fight against extreme poverty. It was set up in 1960 to assist the poorest countries which cannot afford to borrow money from the World Bank on its normal terms. It lends to countries with a per capita income, in 1998 terms, of less than $895, that is less than $3 a day. There is also an exception for small island economies that have limited creditworthiness. The beneficiaries of IDA lending are the 2.3 billion people comprising 53% of the total population of the developing countries, who live in the 78 countries which are eligible to borrow from IDA. Today, 1.5 billion of these people survive on incomes of $2 or less a day and 1.07 billion on less than $1 a day.
The mission of IDA is to support efficient and effective programmes to reduce poverty and improve the quality of life in its poorest member countries. IDA helps build the human capital, policies, institutions and physical infrastructure needed to bring about equitable and sustainable growth. Research conducted by the World Bank has shown that positive growth rates do not automatically lead to poverty reduction. Additional measures are needed to ensure that this takes place and IDA is the primary multilateral agency which is specifically charged with ensuring that these measures are identified and undertaken.
The current debate on development issues often focuses on cases where progress and development fall short of what was expected at the outset. However, we should not lose sight of how much has been achieved over the years. Over the past generation, more has been done to reduce poverty and raise the quality of life than during any comparable period in human history. Advances in health care in particular have brought enormous benefits to the developing countries.
Over the past 30 years infant mortality rates have been cut in half, life expectancy has increased from 55 years to 64 years, child malnu trition rates are 20% lower than 30 years ago and certain nutrition-deficient diseases have almost disappeared. Primary school enrolment rates in developing countries have reached almost 80% and gender disparities have narrowed, with the percentage of girls in secondary schools rising to 45%. Adult literacy has risen from 46% to 70% and there is greater consensus than ever before, in rich and poor countries alike, on what governments must do to improve the lives of their people. The developing countries themselves have been the motor driving these achievements, but their efforts have received strong support from donors, including IDA.
It must also be recognised that a large number of developing countries at the lower end of the income spectrum continues to experience unacceptably high levels of poverty and deprivation. In these countries poverty reduction strategies must help to build capacity to address the weaknesses in governance and in institutions which lie at the root of their poor performance. It has increasingly been recognised that good governance is essential both to economic development and to the effectiveness of development assistance.
The twelfth replenishment or IDA 12 negotiations identified four dimensions of governance which are particularly important to economic development, poverty reduction and the effective use of IDA resources. These are accountable and competent public institutions, transparent economic and social policies and practices, a predictable and stable legal framework and participation by affected groups and civil society. IDA is selective in identifying those countries which achieve progress in implementing policy reform programmes, especially instances of poor governance and corruption.
The experience of overseas development aid over the past decades has amply demonstrated that these issues, and in particular corruption, tend to undermine development and constrain aid effectiveness. Corruption also creates barriers to the effective promotion of private sector development, raising costs and reducing growth.
Gender inequality is also inimical to growth in that it deprives a nation of a significant part of its productive assets and discrimination due to caste, race, ethnicity or religion is also a significant barrier to growth and can even undermine results already achieved when it leads to civil conflict.
IDA and the World Bank are now committed to addressing the problems of institutional weakness combined with inappropriate or unenforced policy or legal frameworks which often permit corruption to flourish. IDA recognises that addressing these problems will require a long-term effort, particularly in building up the institutional capacity to make the necessary changes.
IDA's mandate will also take account of issues such as democratisation and respect for human rights which can also have important long-term implications for the capacity of a country to initiate and, more importantly, sustain programmes for effective poverty reduction, economic adjustment and growth. Lending to countries with weak governance will be scaled back or stopped entirely if necessary.
IDA recognises that its impact on poverty can be judged only by the results which its operations achieve in the field. For the twelfth replenishment a number of priorities have been agreed by IDA donors. These will focus on investment in people which has been shown to be vital for development. It will also promote broadly based development and encourage sectoral reforms that promote labour intensive growth and benefit the poor. Specifically, IDA 12 will give priority to investments in education, health and social programmes, reduction in non-productive expenditure, such as excessive military spending, pro-poor policy reforms, especially those which address the needs of the rural poor, small farmers and micro-enterprises, policies to ensure the sustainable use of natural resources, assuring the access of the poor to land, credit and information, establishing basic labour standards and reforming legislation and policies that disadvantage the poor.
As a major step toward concerted action for development, the international donor community has agreed to focus on a series of key goals in partnership with developing countries. These goals, which are based on United Nations conferences and resolutions reflecting broad agreement by the international community as a whole, were set out in Shaping the 21st Century: The Contribution of Development Co-operation, issued by the Development Assistance Committee of the Organisation for Economic Co-operation and Development in May 1996.
The goals for the year 2015 include reducing by half the proportion of people living in extreme poverty; achieving universal primary education in all countries and universal access to reproductive health services; reducing by two-thirds the mortality rates of children under five and maternal mortality by three-fourths; ensuring full access to primary health care; and reversing trends in the loss of environmental resources. The intermediate goals targeted for the year 2005 include demonstrated progress toward gender equality by eliminating gender disparities in primary and secondary education and the implementation of national strategies for sustainable development in all countries.
The recently inaugurated Poverty Reduction Strategy Papers represent an innovative approach in the fight against poverty and one which has found wide acceptance among both donor and recipient countries. Among other innovations, they offer a framework within which the World Bank, including IDA, the IMF, donors and beneficiary countries can work together to enhance development impact in a participatory manner, integrating priority measures for poverty reduction and structural reforms within a growth-oriented macroeconomic framework.
Education, in particular, provides major economic, social, cultural and institutional benefits. A new education sector strategy is being prepared by IDA which is expected to provide a framework for deepening the policy dialogue with the world's poorest countries on the options for rapidly increasing access to quality basic education, with a focus on making better use of government, donor, and private resources.
IDA offers loans free of interest, carrying only a nominal service charge. The loans have maturities of 35 or 40 years with a ten year grace period on repayment of principal. They are funded by IDA replenishments which consist of grants provided mainly by its richer member countries. These donor replenishments are supplemented by repayments made by IDA's borrowers in respect of earlier loans and transfers from the available net income of the World Bank.
The twelfth replenishment, IDA 12, amounts to SDR 8.65 billion and covers the period starting 1 July 1999. This donor funding, when combined with the reflows and World Bank transfers, will allow IDA to commit lending of about SDR 15.25 billion between 1 July 1999 and 30 June 2002.
The Irish contribution to IDA 12 will amount to IR£20 million. This is made up of a basic contribution of approximately £15 million, 0.18% of total donor resources, an increase from 0.13% for IDA 11. We have also pledged a supplementary contribution of £5 million which brings the total for Ireland to 0.24% of total donor contributions.
Of the donor countries, Ireland, Finland, Greece and the UK have increased their basic shares from that in IDA 11. In addition, Ireland, Australia, the Czech Republic and Israel have added supplements to their basic contributions. Senators may note the Irish agreement to exceed our previous share was instrumental in evoking increases in basic contributions and other supplementary payments and thereby helped bridge the funding gap facing IDA 12 and bringing the difficult negotiations on this replenishment to a successful conclusion. The actual cash payments for IDA 12 will be made over a six year period beginning in the year 2000. Contributions to multilateral bodies such as IDA and the World Bank qualify as part of Ireland's overall contribution to overseas development in the context of the UN target of 0.7% of GNP.
Overall, IDA assistance is positive, progressive and imaginative and is fully focused on both meeting basic human needs and on raising the aspirations and potential of the poorest sections of humanity. However, it is not sentimental. IDA assistance is not measured against the policy performance of the recipient countries. While neither the IDA nor the World Bank Group has any interest in taking control of the domestic policy-making process in recipient countries, the requirements of effective aid-giving require that certain minimum standards are met in areas such as governance and the fight against corruption. To ignore these realities is to risk wasting resources which could be used to achieve real results in countries which are making serious efforts to improve their institutional capacity.
IDA is fully prepared and equipped to render such assistance as is necessary to governments which make serious efforts to address these problems. Ireland's membership of IDA was authorised by the International Development Association Act, 1960. Our contributions to the various replenishments have each been authorised by amendments to that Act. This Bill will enable us to make our contribution to IDA 12. I therefore recommend the Bill for the approval of the House.
