McCreevy urges full implementation of debt relief plan

The Minister for Finance, Mr McCreevy, has called for the full implementation of a new international measure to cancel some of the debts of the poorest countries.

Addressing the annual joint meeting of the International Monetary Fund and the World Bank, the Minister called on the governors of the two institutions "to resolve any outstanding difficulties" in implementing the initiative for heavily indebted poor countries. The plan allows for $27 billion (€25.4 billion) in debts owed by these countries to be cancelled if they agree to carry out programmes to reduce poverty in areas such as education, health care and transport.

Under the previous debt relief plan, only a handful of countries were able to benefit. President Clinton - who spoke yesterday after Mr McCreevy - pledged US support for the plan.

He has sent a Bill to Congress requesting about $600 million for the IMF and $400 million for debt relief.

Mr McCreevy said the Republic had already "adopted legislation enabling it to participate in funding the enhanced initiative to a degree commensurate with its relative standing in the donor community".

Earlier this week, Mr Gordon Brown, British Chancellor of the Exchequer and chairman of the IMF committee overseeing the new plan, said enough funding pledges had been received to begin the debt cancellation programme without further delay. Last week Irish rock star Bono sought the support of Pope John Paul II for the debt reduction plan.

Officials in the Irish delegation in Washington said, however, that there were still "some difficulties" over the funding of the plan on the World Bank side.

On the part of the IMF, the necessary funding has been approved and the EU is also participating through its development fund.

Mr McCreevy said: "Debt relief is a vital element in a more broadly based development strategy aimed at growth and poverty alleviation. The heavily indebted poor countries initiative, driven by the Bank and the Fund, is clearly at a crucial stage in its development."

It aimed at "both freeing the most heavily indebted poorest countries from the burden of their debt and offering them a definitive exit from the debt treadmill, which is seriously undermining their development.

"The initiative must be implemented in a way that achieves its basic aims. We must remain open to any further enhancements required for this to be achieved, in particular taking greater account of human needs in determining eligibility and the extent of the relief required," the Minister said.

Mr Michel Camdessus, managing director of the IMF, told the meeting there was a price to pay for debt reduction.

It involved "extensive and exhausting negotiations to convince countries to contribute in one way or another to this effort".

Some 88 countries have now agreed to contribute, "of which the large majority are developing or transition countries", Mr Camdessus said. The IMF will sell 14 million ounces of gold as part of the debt relief plan.

The president of the World Bank, Mr James Wolfensohn, said weak governance threatened to undermine the initiative, which would work only if the resources that were freed were purposefully used for poverty reduction. With weak governance, there would be no progress in education, health, water, energy or rural and urban development.

The heavily indebted poor countries' debt forgiveness programme was "the beginning of our challenge, not the end", Mr Wolfensohn said.