State urged to lead on debt cancellation

IRELAND IS well placed to demonstrate leadership in international efforts to address the debt crisis experienced by the developing…

IRELAND IS well placed to demonstrate leadership in international efforts to address the debt crisis experienced by the developing world, an Oireachtas committee heard yesterday.

Nessa Ní Chasaide of Debt and Development Coalition Ireland (DDCI) a group which campaigns for debt cancellation, told members of the committee on foreign affairs that the debt crisis is more pressing than ever as a result of the global economic downturn.

“Due to the very significant deterioration in the budgetary positions of southern (hemisphere) governments in the midst of the financial crisis, debts are now steeply on the rise again,” she said, explaining that the combined external debts of impoverished nations have now reached $2.9 trillion (€1.97 trillion). At the same time, the World Bank and International Monetary Fund (IMF) have agreed on changes which will give governments of developing countries easier access to credit.

The Irish Government is currently drafting a new policy on the issue of international debt. Ms Ní Chasaide acknowledged that the State’s current policy, introduced in 2002, is “comparatively progressive internationally” because it highlights the fact that debt repayments present a major obstacle to poverty reduction and attaining the Millennium Development Goals. Ireland had already shown strong leadership, she noted, by being the first northern hemisphere state to support total debt cancellation as a viable political objective for highly indebted developing countries.

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Ireland could play an honest broker role with no vested interest as part of efforts to address these faults, she added. The DDCI recommends that the Government push for expanded, unconditional debt cancellation for all developing countries that need it; a democratisation of the governance structures of the World Bank and IMF; a shift from a conditionality-based financing approach to one of legally binding, just and responsible financing standards; and support for tackling illegitimate debts.

Labour TD Michael D Higgins deplored the impact of crippling debts on developing nations. “Some countries pay more in debt service than what we are giving them in aid,” he noted.