The Government is providing £31.5 million of public funds to assist some of the world's poorest countries. However, senior officials have said that cancellation of developing countries' multibillion pound world debt was not a viable option for the international community. Mr Finbarr Kelly, an assistant principal officer at the Department of Finance, said that debt cancellation was being treated "as a single dimension solution to a multi-faceted problem". "What effect do you think debt cancellation would have on the investment decisions of inward investors in any country?" he asked. He said that debt relief was a component of "an armoury of initiatives" for developing countries to find their way out of their difficulties.

The £31.5 million package, an initiative from the Department of Finance and the Department of Foreign Affairs, includes £22 million of new funding from the Government, with the rest provided for in the overseas development assistance budget.

Of the total, £9.5 million is marked for debt relief in Mozambique and Tanzania, £7 million for the Enhanced Structural Adjustment Facility (ESAF) of the International Monetary Fund (IMF), and £15 million for multilateral debt relief. Mr Kelly said that an approach to chronic indebtedness which included well-structured economic and social initiatives was the best solution. "It does not destroy business confidence or cause nervousness in the international financial and business community," he said. The approach was criticised by the Debt and Development Coalition Ireland group, which stated that "harsh ESAF programmes have lead to drops in health and education provision, huge job losses, large price hikes and wage cuts, and the collapse of local industry".

Ms Jean Somers, the group's co-ordinator, stated that 170 Irish signatures in favour of debt cancellation have been collected. A set of principles underlying the Government's approach to developing countries' indebtedness was also revealed yesterday. These include the provision of debt relief as "an integral part of Ireland's overall overseas development aid strategy", greater transparency in the workings of the Bretton Woods institutions, and increased flexibility in the implementation of the joint IMF/World Bank's Heavily Indebted Poor Countries (HIPC) initiative.

The World Bank's president, Mr James Wolfensolm, welcomed the Irish contribution yesterday, stating that the HIPC initiative's success was based on the concerted efforts of all official creditors.