HL Deb 04 July 1995 vol 565 cc1001-3

2.56 p.m.

Lord Judd asked Her Majesty's Government:

What role they see for the International Development Association (IDA) in relationship to the World Bank and to their own overseas development co-operation priorities and what action they are taking to enable it to fulfil that role.

Lord Inglewood

My Lords, the International Development Association has an important leadership role in support of poverty reduction, sound economic management and sustainable development. The IDA's policy agenda closely mirrors the priority objectives of the UK aid programme. In the current negotiations on the eleventh replenishment of IDA, we are working with others to ensure a sharper focus on poverty reduction as well as a significant replenishment of IDA's resources.

Lord Judd

My Lords, I thank the Minister for that reply. Can he assure the House that British support for a significant replenishment of the IDA will not be at the expense of our support for the European Development Fund with its concentration on some of the poorest countries in the world? Do the Government accept that in the past IDA credits have sometimes failed to achieve the objective of alleviating poverty and may even have exacerbated it? Will the Government insist in future that both IDA and the World Bank, when supporting structural adjustment programmes, must ensure that health and education are protected and even enhanced in the development programmes of the recipient countries?

Lord Inglewood

My Lords, I must begin by assuring the noble Lord, Lord Judd, that the IDA and the European Development Fund are matters which are taken separately. The noble Lord is right. Particularly with the benefit of hindsight, both we and, I think, the bank would accept that mistakes have been made in the past in projects which were supported. The kind of points the noble Lord asks about are those which are of the greatest concern to the donors and the bank itself. The working group on poverty reduction has been set up to endeavour to focus attention on the kind of matters to which the noble Lord refers. We have to try both to focus on poverty reduction and at the same time ensure that we have programmes that lead to sustainable development for the future.

Baroness Rawlings

My Lords, may I ask my noble friend to comment on the progress that the IDA and the World Bank are making in constructing bridges with the NGO world, particularly with those in the UK which operate in the developing world?

Lord Inglewood

My Lords, I am very pleased to be able to tell my noble friend that there has recently been a shift in World Bank policy. The bank has now pledged to consult more widely with people affected by its activities in developing countries and with NGOs. That is something we welcome very much. In particular, the NGOs probably make the greatest impact when consulted at an early stage of development projects and policies. That obviously requires trust to be built up. We were delighted to learn that the World Bank recently asked the Intermediate Technology Development Group to organise a consultation with European NGOs as part of efforts to develop new policies in support of renewable energy.

Lord Redesdale

My Lords, considering that the Government will be reviewing the IDA before the next replenishment, will they press for a greater proportion of IDA funds to be focused on the least developed countries in Africa?

Lord Inglewood

My Lords, I can only reiterate what I said earlier. It is important that we focus on poverty reduction. Africa is the source of many of the greatest problems.

Viscount Waverley

My Lords, is it not a fact that the Americans are scaling down their contributions to IDA and that that will send conflicting messages to other donor nations when considering their contribution levels?

Lord Inglewood

My Lords, the noble Viscount is right to point out that the United States has fallen behind with its current contributions to the present IDA 10. There is a serious question mark over contributions for IDA 11. Our position is at one with those of the Group of Seven and the communiqué from Halifax. We urge all donor countries promptly to fulfil their commitments to IDA 10 and also to support a significant replenishment through IDA 11 for the next chapter.

Lord Rea

My Lords, with the permission of the House, having inadvertently broken the rules with my earlier intervention, perhaps I may ask the noble Lord whether he is aware that IDA loaned 2.7 billion dollars to the severely indebted low income countries in 1994. Is he further aware that 1.9 billion dollars—that is 70 per cent.—went to cover debt service, leaving only 30 per cent. (0.8 billion dollars) for true development assistance? Is not that a misuse of World Bank funds and not in the spirit of the original Bretton Woods agreement, which aimed to reduce poverty throughout the world?

Lord Inglewood

My Lords, I am not in a position to comment in detail on the interesting point made by the noble Lord, Lord Rea. The Government are concerned on the one hand about problems of debt; on the other, they are very anxious to ensure that debts owed to multilateral institutions are not simply unilaterally rescheduled. For example, a wish to try to get out of this particular conundrum led my right honourable friend the Chancellor of the Exchequer to bring forward proposals whereby some of the gold reserves might be sold and used to generate income in order to help the problems of interest in the kind of circumstances which the noble Lord alludes to.

Lord Judd

My Lords, will the Minister accept that the House finds his remarks about government support for multilateral aid highly encouraging? Will he also accept that they do not sit altogether logically alongside frequent laments by the Government that multilateral aid programmes are undermining bilateral aid programmes? Can the Minister assure the House that at an early opportunity there will be a comprehensive statement on the Government's policy towards both bilateral and multilateral programmes and the balance between them? Is not the important point what helps the poor of the world most effectively?

Lord Inglewood

My Lords, of course that is right. It is in order to ensure that we retain a balance between our multilateral commitments and our bilateral aid—which, as the noble Lord will be aware, was recently recognised by the OECD as being among the most effective there is—that we try to ensure that the position will be in equilibrium. If there is to be any major change in these matters, I can assure your Lordships that it will be reported to your Lordships' House.