These are interesting times in regard to the issue of debt cancellation. Committee members will remember the Jubilee 2000 campaign which had a significant impact here in terms of the number of signatures collected. Ireland had the highest rate of signing per capita in a campaign which asked governments to ask the international financial institutions to cancel the debt owed to them by the poorest countries.
At the Sea Island G8 meeting last June, much publicity surrounded the issue of debt cancellation and there was speculation that something might emerge from the meeting. Nothing emerged and we are not sure whether the issue was discussed because such meetings are not particularly transparent. However, we have learned that a proposal will be discussed at a meeting of the representatives of G7 Finance Ministers this week. As the G7 and other rich country creditors have promised to write off debts owed to them by the poorest countries, the proposal will focus on multilateral creditors, in particular the IMF and World Bank, which are now the most significant creditors of the poorest countries.
The Debt and Development Coalition discussed previously with this committee the heavily-indebted poor countries, HIPC, initiative, of which there have been many criticisms, including the fact that it is run by the creditors which act as judge and plaintiff. The initiative covers just 42 countries while other severely indebted countries such as Nigeria and Indonesia are not included, and it does not provide enough debt cancellation. Debt service is being reduced but only by approximately one third on average.
The Debt and Development Coalition has argued that in terms of good global governance a clear need exists for a transparent and independent mechanism to deal with unpayable debt, which would deal with conflicts of interest. However, it has been clearly demonstrated that the poorest countries urgently need 100% debt cancellation and cannot wait for such a development. Some progress has been made. Some 27 countries are receiving some debt reduction under the HIPC initiative and this has had a positive impact in terms of the expenditure increasing. For example, in Tanzania education spending has increased and school fees have been eliminated, which has enabled a further 1.6 million children to attend school.
Debt campaigns in poor countries have always stressed the need to ensure that people at community level benefit from any savings made as a result of debt reduction. A positive development is that such campaigns are facilitating groups at local level to take part in monitoring the use of savings made. This has occurred, for example, in Uganda and Tanzania, countries with which we have a bilateral aid relationship.
As Mr. Colin Roche of Oxfam stated, recent reports from the IMF and World Bank acknowledge that the HIPC initiative is failing to resolve the debt crisis and that African countries which have received debt reduction are still spending an average of 15% of their revenues servicing those debts. According to World Bank data, most of the millennium development goals, which are to be met by 2015, will not be met by most countries in Africa. According to the United Nations development programme, two thirds of the countries facing major obstacles in reaching the goals are heavily-indebted poor countries.
With regard to the next steps to be taken, obviously cancelling debt owed to the IMF and World Bank is a step for which we have campaigned for many years. They are currently cancelling just one third of the debt owed to them. The debt is particularly onerous because if a country defaults on a debt owed to the IMF or World Bank it becomes ineligible for aid, loans and debt reduction.
Ireland has played a positive role in that it was the first country to call for 100% cancellation of debt owed by heavily-indebted poor countries in the policy launched in 2002 by the Minister of State at the Department of Foreign Affairs, Deputy Tom Kitt, and the Department of Finance. The news that support for this call is growing in the US and UK is promising but it may still be restricted to a fairly small number of countries. In addition, the US may wish to use current resources going to poor countries to write off IMF and World Bank debt. The Debt and Development Coalition has always argued that debt should be cancelled using additional resources and that the IMF and World Bank should consider their considerable reserves; the IMF, for example, has one of the largest gold reserves of any official body.
The upcoming AGM of both institutions provides the new Minister for Finance with a significant opportunity to press for the best deal and cancellation of unpayable debt owed to those institutions by poor countries. We recommend that the Minister should press for the cancellation of unpayable debt owed to the institutions by poor countries and urge them to look at their own resources in order to do this as well as to highlight the need for a fair and transparent process to deal with the issue in the longer term. Thank you.