APPENDIX
MEMORANDUM FROM THE DEPARTMENT FOR INTERNATIONAL
DEVELOPMENT
| Draft International Development Association (Fourteenth Replenishment) Order 2006
|
1. This explanatory memorandum
has been prepared by the Department for International Development
and is laid before the House of Commons by Command of Her Majesty.
This memorandum contains information
for the Select Committee on Statutory Instruments.
2. Description
2.1 The proposed Order permits
the Secretary of State to make a further contribution of £1,430,000,000
to the International Development Association pursuant to arrangements
that have been made between the International Development Association
and Her Majesty's Government in accordance with Resolution No.
209 of the Board of Governors.
2.2 Additionally,
the Order permits the Secretary of State to make payment of sums
required to redeem any non-interest bearing and non-negotiable
notes or other obligations that may be issued or created by him
as a result of the arrangements that are to be made by the Government
of the United Kingdom and the Bank regarding the payments totalling
£1,430,000,000.
3. Matters of special interest
to the Select Committee on Statutory Instruments
3.1 The draft Order is to be
made pursuant to section 11 of the International Development Act
2002. Section 11 applies when the Government becomes bound to
make a relevant payment to a multilateral development bank. The
section goes on to provide that the Secretary of State can only
make the relevant payment to the bank once the payment has been
approved by an order made by him with Treasury approval. But,
the Secretary of State cannot make such an order until a draft
of it has been laid before and approved by the House of Commons.
3.2 The purpose of an Order
made under section 11 is to allow the Secretary of State to make
the relevant payments when the Government is bound to do so. The
deposit of an Instrument of Commitment with the International
Development Association binds the Government to make the relevant
payment. As section 11 only applies when the Government is bound
to make the relevant payment and, at present, it is not so bound,
this raises the technical issue of whether the Secretary of State
may properly present the draft Order to the House when the Government
is not yet bound to make the payments the Order deals with and
thus, as yet, has no power to make the Order.
3.3 The seeking of Parliamentary
approval for the draft Order before the Government is bound is
the usual practice in these cases. The Committee has considered
this issue previously (for example in respect of the draft International
Fund for Agricultural Development (Sixth Replenishment) Order
2003 in its Fourth report (HC 126-iv 2002-03)) and has concluded
that there is no technical reason for the House not to approve
the draft Order but that it should merely be aware that it is
acting, as on occasions in the past, on a Ministerial undertaking
that the Order will not be made until the Government is bound.
Accordingly the Secretary of State gives his undertaking that
no Order will be made in terms of the draft until, on deposit
of the Instrument of Commitment, the Government is bound to make
the payment. The purpose of the Secretary of State laying the
draft Order before the House is to secure the approval of the
House before the deposit of the Instrument of Commitment.
3.4 The Department respectfully
submits that the contents of the draft Order do not require any
departure from the Committee's established approach to the exercise
of the powers under section 11.
4. Legislative Background
4.1 The proposed Order is being
made to enable the Secretary of State to contribute further (the
UK has contributed funds on fourteen previous occasions) to the
International Development Association. The purpose of this further
contribution, together with contributions pledged by other donors,
is to provide the International Development Association with commitment
capacity for lending on highly concessional terms to the poorest
countries in the world over the period, 2005-2008. As stated above.
section 11 of the International Development Act 2002 permits the
Secretary of State to make relevant payments to multilateral development
banks where the Government of the United Kingdom is bound to make
such a payment, but that in order to make a payment he must make
an order, which has Treasury approval and a draft of which has
been approved by the House of Commons.
5. Extent
5.1 This instrument
applies to all of the United Kingdom.
6. European Convention on
Human Rights
6.1 Hilary Benn, the Secretary
of State for International Development, has made the
following statement regarding Human
Rights:
In my view the provisions of the
International Development Association (Fourteenth Replenishment)
Order 2005 are compatible with the Convention rights.
7. Policy Background
7.1 The Department for International
Development is responsible for leading the United Kingdom's contribution
to promoting development and the reduction of poverty. The Department's
overall objective is the elimination of world pove y. This objective
was set out in the 1997 White Paper "Eliminating World Poverty:
A Challenge for the 21st Century", and reaffirmed in the
2000 White Paper "Eliminating World Poverty: Making Globalisation
Work for the Poor". The Department delivers its international
development funds through a combination of bilateral programmes,
and contributions to various international financial institutions,
such as the International Development Association.
7.2 The International Development
Association is part of the World Bank Group. It aims to help the
poorest countries reduce poverty by providing grants and "credits".
"Credits" are loans at zero interest with a 10-year
grace period and maturities of 35 to 45 years. Its policy framework
focuses on macroeconomic growth; social sector support; protecting
the environment for sustainable development; fostering recovery
in post-conflict countries; and promoting trade and regional integration.
7.3 The other organisations
that make up the World Bank Group are the International Bank for
Reconstruction and Development (IBRD), the International Finance
Corporation (IFC), the Multilateral Investment Guarantee Agency
(MIGA), and the International Centre for Settlement of Investment
Disputes (IC SID). The overarching goal of the Group is to reduce
poverty and improve living standards by supporting sustainable
growth and investment in people. The UK has an approximate shareholding
in the World Bank of 5%.
7.4 International Development
Association replenishment is generally at three-year intervals.
The United Kingdom's contributions to the last five replenishments
have been as follows:
| Tenth replenishment (1993)
| £620.0 million |
| Eleventh (interim) replenishment (1997)
| £177.7 million |
| Eleventh replenishment (1998) |
£299.2 million |
| Twelfth replenishment (2000) |
£511.3 million |
| Thirteenth replenishment (2002) |
£1,000.0 million |
7.5 As
stated above, the purpose of the present Order is to enable the
Government to make a contribution to the fourteenth replenishment
of the International Development Association of sums totalling
£1.43 billion. This amount was reached through negotiations
with the International Development Association~ s Board of Governors.
7.6 There are two elements
to this £1.43 billion figure — additional contributions
of
£1.33 billion, and an additional
incentive contribution of £100 million. Under the arrangements
in Resolution 209 the UK has pledged to make both payments, the
second being a contingent contribution on the International Development
Association making progress on working effectively with other
development agencies and in reducing the number of conditions
it applies to its lending. In accordance with the arrangements
both payments are included in the Instrument of Commitment.
7.7 The Association adopted
the Fourteenth Replenishment Resolution (Resolution INo. 209)
on 13 April 2005. (A copy of Resolution No. 209 has been laid
in the House of Commons library). In accordance with Resolution
No. 209 the United Kingdom's contribution will be made in three
annual instalments, each in the form of a non-negotiable, non-interest
bearing promissory note expressed in pounds sterling and encashable
on demand.
8. Impact
8.1 A Regulatory Impact Assessment
has not been prepared for this instrument as it has no impact
on business, charities or voluntary bodies.
9. Contact
9.1 Further information concerning
the proposed instrument can be obtained from John Moye at the
Department for International Development via e-mail (j moye(~dfid.eov.uk)
or telephone (020 7023 0250).
Department for International Development
January 2006
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