Thursday, 29 June 2006
Dáil Eireann Debate
36. Mr. Durkan asked the Minister for Foreign Affairs the extent to which he or his EU and UN colleagues have monitored the impact and extent of debt write-off to developing countries; if commitments entered into by the IMF or World Bank have been honoured in full; if elements of debt relief promised have failed to materialise; if further arrangements incurring further debt liability have been entered into in the interim. [25315/06]
155. Mr. Durkan asked the Minister for Foreign Affairs the countries to which commitments entered into under debt relief or debt write-off have to date been delivered; and if he will make a statement on the matter. [25469/06]
The debt burden is accepted as being a serious factor in retarding the progress of the poorest countries from achieving development. Ireland’s principal commitment at present in the area of debt relief and debt cancellation is to the Multilateral Debt Relief Initiative (MDRI) at the World Bank/IDA. The Minister for Finance has pledged €59 million as Ireland’s contribution to this programme, which comes into effect on 1 July and will continue until 2044. The total amount of debt relief planned by the World Bank is US$37 billion. Exceptionally, Ireland intends to pay the full amount of its contribution in the present year. This decision not only underlines Ireland’s continued support for 100% debt relief for the poorest countries but also helps to ensure that the World Bank/IDA is adequately funded and is enabled to continue providing credit to developing countries.
The MDRI is expected to provide debt relief initially for 17 heavily-indebted poor countries (HIPC) which have already reached completion point in the existing HIPC programme, that is to say they have fulfilled all the conditions of financial and economic management prescribed by the World Bank. Other heavily-indebted countries may qualify in due course.
The HIPC debt relief programme initiated in 1996 was open to 42 countries, of which eighteen have now reached completion point. A number of other countries are still in the process and may reach completion point later. Ireland contributed €30 million to this programme. However, although substantial amounts of debt were cancelled, it became apparent that the programme had not taken sufficient account of the levels of poverty and of other problems such as HIV/AIDS in the participatin g countries. Ireland has taken the view that a country’s requirement to repay debt must not prevent it from maintaining an adequate level of expenditure on services such as education, health and water supply.
Under the MDRI now coming into effect, the yearly value of the debts being cancelled could be up to US$700 million. While the impact of debt relief measures taken to date requires further analysis, it is clear that debt relief alone will not solve the problems of poverty and indebtedness. Even if all of the relief in the MDRI programme turned into new money in developing country budgets, it would still be less than one-fiftieth of the increase in annual aid budgets which the World Bank estimates is needed to achieve the internationally agreed Millennium Development Goals.
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