Dáil Éireann - Volume 474 - 06 February, 1997

Ceisteanna—Questions. Priority Questions. - Developing Countries' Debts.

4. Mr. R. Burke asked the Tánaiste and Minister for Foreign Affairs his views on any proposal which would aim to cancel by the year 2000 the debts owed to first world countries by less developed countries; the steps, if any, he will take if he views any such proposal positively; and if he will make a statement on the matter. [3334/97]

Minister of State at the Department of Foreign Affairs (Ms Burton): The Government is deeply concerned about the debt problem of the poorest and least developed countries and the serious constraint it imposes on their economic and social development. We have consistently used the relevant international fora to emphasise the need to find ways to address the debt problems of the least developed countries and to indicate our openness to innovative solutions. In his address to the World Social Summit in Copenhagen in March 1995 the Taoiseach called for a fresh approach to debt issues and the consideration of all options, including debt cancellation. In addition, the Minister for Finance, as Ireland's representative on the board of governors of the World Bank and the IMF, has consistently highlighted the situation of the most severely indebted countries and has pressed the case for significant alleviation of the debt burden of developing countries.

There is now a growing sensitivity at the international level to the debt problems of the developing countries and a general recognition and acceptance that it is essential to make serious inroads into the problem of excessive debt burdens. The debt initiative for highly indebted poor countries, the so-called HIPC Initiative which was [925] agreed at the annual meeting of the IMF and World Bank last October, represents a significant step forward in the international community's response to the debt problem of the most indebted countries. This initiative is designed to relieve the debts of as many as 20 poor countries, most of them in Africa. It is intended to help reduce their debts to sustainable levels in the interests of their economic and social development. It is comprehensive in nature in that all creditors, including multilateral financial institutions as well as bilateral and commercial creditors, are expected to meet their share of the necessary debt reduction of eligible countries' debt. As part of the HIPC Initiative, the Paris Club of bilateral creditor countries has agreed on its part to write off up to 80 per cent of eligible debt owed by lowincome countries on a case by case basis, compared to the 67 per cent currently available under the so-called Naples terms. The initiative can produce significant debt relief for severely indebted countries and should be given an opportunity to work.

The Deputy will appreciate that Ireland is a non-creditor country. All Irish aid is given by way of grant and does not add to the debt burden of any developing country. We are therefore not directly party to the debt problem and are not in a position to give a lead in the area of debt cancellation, as we do not hold any Third World debt. However, we will continue to use our influence to press for a just and comprehensive longterm solution to the debt problem in the developing world and would be prepared to give positive consideration to any proposals aimed at achieving that, including those put forward by various NGOs in the context of millennium celebrations. On “Today with Pat Kenny” a couple of mornings ago there was a discussion about the millennium and my view is that finding a way to cancel the debt would be an appropriate way to celebrate it.

Mr. R. Burke: It could be a new use for the lottery. Will the Minister of State outline the Government's reaction to the proposal on Third World debt made by the Debt and Development Coalition? Does she agree the £5.6 billion being provided in EU debt relief against a total debt of £226 billion is grossly inadequate? Will she inform the House of any progress made towards addressing this issue under the EU Presidency and our current membership of the Troika?

Ms Burton: I met the Debt and Development Coalition on a number of occasions. Its relationship with the Irish Government is unique compared to the position in most EU countries. Its proposals were reasonable. During the course of the Presidency I was one of 25 people invited by the Danish Government to take part in a follow-up conference to the Copenhagen summit, which included an in-depth discussion by people from around the world on how the problem might be [926] resolved. An agreement should be reached on debt cancellation, the basis of which should be a quid pro quo from the developing world that the money thus saved would go into the social investment areas of health, education, water and sanitation; and that developing countries should also strive for fiscal reform. Some such countries have wealthy élites and sectors of the economy where taxation revenue is produced but not collected and thus does not go into their budgets. Countries such as Tanzania pay 30 per cent of their budget in debt relief. I have been critical of this in the past and have had discussions with the IMF and the World Bank on the subject. Those countries need some relief in order to put more money into health and education. The proposals put forward by the NGOs merit the most serious attention.

Mr. R. Burke: Does the Minister of State support the proposal for a world conference on Third World debt and will she outline any progress made in securing such a conference?

Ms Burton: I have no difficulty with the proposal provided the conference is not another collection of the great and good from around the world who talk and go home without anything happening. At the follow-up to the Copenhagen conference, during our Presidency, there was a serious discussion of the mechanisms used, particularly the impact the reduction of the debt would have on the poorest countries. We should ask ourselves why we want to reduce the debt burden — surely it is to allow those countries spend more on health, education, water and sanitation but not on armaments. It is necessary that there should be a structured dialogue which promotes investment in those areas as well as promoting fiscal reform in some of the countries where there is a capacity for tax collection, particularly from the very well off. I support the conference, but I would like to have the agenda pretty well determined.

Mr. R. Burke: It would be important that the Minister of State and the Government, as a member of the Troika, should try to influence the agenda rather than sitting back passively while it is set.

Will the Minister of State give her reaction to a statement made by Dr. Joseph Hanlon at a seminar on the role of the IMF and the World Bank in Third World debt in which he claims that the World Bank and the International Monetary Fund are doing so much damage to African economies that Irish aid amounts to no more than a sticking plaster applied afterwards? Does it not say something about the problems of Africa or the problems of the Third World, and should we [927] not try to do something about lifting the burden of debt?

Ms Burton: I was honoured to be the Minister asked by Dr. Joseph Hanlon to launch his book on the subject because of Ireland's position and because, as reported prominently in the papers today, we are the only country in the European Union that is significantly increasing its development aid. Dr. Joseph Hanlon chose that occasion to compliment the Government on its aid programme. In particular, he complimented the Minister for Finance and the Tánaiste on the fact that Ireland is holding its position on joining ESAF, the Enhanced Structural Adjustment Fund mechanism of the IMF until such time as we get assurances from the IMF that structural adjustment packages will take into account the needs of the poorest in the countries concerned. Dr. Hanlon spoke at some length about how this was the only action by a government anywhere in the world in this respect. In that context the Deputy might agree that we have taken an extremely strong lead in that area and will continue to do so.

Mr. R. Burke: Will the Minister of State agree that the lead taken by my party leader on Monday of last week at a conference on human rights attended by representatives of 60 non-governmental organisations and other interested groups, when he committed the incoming Fianna Fáil administration to increasing Irish aid to between 0.4 per cent and 0.5 per cent during the lifetime of the next Government as a minimum, with the hope of increasing it towards 0.7 per cent, depending on the growth pattern, is a very important commitment? It is also an important recognition by all sides of the House of the need to provide aid to the less well off in the world.

Ms Burton: I welcome the commitment given by Deputy Ahern. I hope it finds favour among his would-be partners in the Progressive Democrats because they have had some rather hard words to say about Government expenditure. I am happy the Deputy has brought up this question. I was concerned that the level of the financial commitment was not on a par with the commitment that Fianna Fáil, during the period in office of the Fianna Fáil-Labour Government, delivered on and have continued to deliver on. The newspaper report was rather short. Perhaps the Deputy can supply me with detailed figures. In general I welcome the commitment.

Mr. R. Burke: The Minister of State need have no doubt that it is a full commitment. She will also be delighted to hear of the warmth of the [928] response it has received from NGOs throughout the country.

Ms Burton: What about Deputy Harney?