Herbert Eser (Herb) Gray (Official Opposition House Leader; Liberal Party House Leader)
Hon. Herb Gray (Windsor West):
Mr. Speaker, I am pleased to speak in this debate on third reading of Bill C-126. I do so because our very distinguished critic, the Hon. Member for Trinity (Miss Nicholson), is not able to be here this evening. She has done an excellent job in taking part in the study of this Bill and putting forward our points of view.
This Bill will authorize the Minister of Finance (Mr. Wilson) to contribute to the new initiative of the International Monetary Fund known as the Enhanced Structural Adjustment Facility, or ESAF. This fund will assist the poorest developing countries with the provision of balance of payments support. Most of these countries are in sub-Saharan Africa and include: Zambia, Zaire, Uganda, Tanzania, Somalia, Sierra Leone, Senegal, Rwanda, Niger, Mozambique, Malawi, Madagascar, Liberia, Lesotho, Kenya, and Ethiopia. The average per capita income of these countries is 300 Canadian dollars per year. The ESAF is a trust fund that will make resources available to these countries at concessional interest rates so as to minimize the impact on their debt servicing burdens.
The two main features of the program are long-term lending and concessional interest rates. This program is designed to allow these countries to make the economic adjustments required to reach a stage of development which will eventually lead to healthy economic growth, rising living standards, and a sustainable balance of payments position. I will talk more about this key provision in a moment.
This initiative arose at the annual summit of industrialized countries in Venice, Italy, last year. I understand the plan was endorsed at the meeting of the group of 24 developing countries that met in April of this year. The ESAF will operate on the basis of two accounts, a loan account and a subsidy account. This Bill authorizes Canada to lend approximately $550 million to the IMF fund. It also authorizes Canada to provide grants of approximately $250 million to subsidize the interest on these loans. This grant will bring the interest rate on Canada's contribution down to 0.5 per cent and will come out of Canada's aid envelope over a period of 12 years.
In a speech given on May 20, 1988, the Hon. Member for Trinity emphasized that the key component in facilitating conditional aid was effectively to implement change cooperatively and to monitor it closely. I must re-emphasize this evening the need for co-operation and acceptance by the recipient country. Imposing harsh and unwanted conditions on the recipient country will only yield resentment and a lack of co-operation. The Hon. Member for Trinity asked the Minister in committee what assurances we had that Canada would assist in monitoring such things as how the money was spent, the performance requirements, and the timetables for implementation. The Minister responded that the initiative was an experiment.
July 14, 1988
Of course, we cannot ask for guarantees. We are not asking for that, but to refer to this initiative as an experiment is not apt. Conditional aid is not new and the failures in implementing this aid are not new. Canada must ensure that these errors are not repeated. Our representatives on the International Monetary Fund should be involved in the monitoring of the program.
As the Hon. Member for Trinity said during her speech at second reading that our Party supported the Bill in principle. The ESAF, as one expert witness told the legislative committee, will provide a window through which richer countries can channel resources to poorer countries. It changes the structure of the IMF from that of a revolving fund. Mr. Michel Camdessus, the new managing director of the IMF, has shown great interest and sensitivity to the concept of adjustment with a human face. I hope this sensitivity will be reflected in the important evaluation, implementation, and monitoring of conditional aid about which the Hon. Member for Trinity spoke previously.
However, while we support this Bill and while the ESAF is necessary, I must point out that it is not a sufficient vehicle for alleviating the debt crisis in the poorest countries. According to a recent United Nation's report, $5 billion in additional flows are required to secure adequately economic growth, to increase imports, and to reduce the debt service ratio in subSaharan Africa. The commitments by Canada and other countries to the ESAF reduces this $5 billion figure to about $2 billion annually, so it is a help. It is also important to note that Canada's contribution to the grant component is not new money but is allocated from our development aid envelope.
Much remains to be done. The poverty in these countries is crushing. Evidence of assistance and aid that address the quality of life, employment needs and social programs in developing countries has been meagre to date. In order to improve the economies of these countries and to set them on the road to economic independence, programs like the ESAF are important. We also need to see evidence of the human face of adjustment that will ensure sensitivity to each country's needs. This means mutual co-operation between assisting and assisted countries when it comes to conditional aid in the future.
I offer these comments as a contribution to the debate on third reading of this Bill. In so doing again I want to pay tribute to the important work of my colleague, the associate critic of finance for the Liberal Party, the Hon. Member for Trinity, for the excellent work she did in studying this Bill and putting forward the point of view of the Liberal Party.
Subtopic: BRETTON WOODS AND RELATED AGREEMENTS ACT