The Government has committed itself for the first time to calling for the total cancellation of debts owed by the world's poorest countries.
The decision marks a major shift of policy after years in which Ireland supported debt relief, rather than debt cancellation, as a solution to the crippling problems of Third World countries.
The Minister for Finance, Mr McCreevy, consistently opposed debt cancellation.
The Minister of State for development co-operation, Mr Tom Kitt, said yesterday that policy had been updated following a review of existing debt-relief measures.
"The Government now believes, in principle, that the total cancellation of the debts of the Heavily Indebted Poor Countries (HIPC) is an acceptable political objective and one that we would support," he said.
"It is also unacceptable to us that countries with very high HIV/AIDS prevalence rates are being obliged to make high levels of debt repayments."
About 40 poor countries, with a cumulative debt of over $200 billion, have been involved in the HIPC initiative since 1996. Although it is beginning now to deliver debt relief, it has been widely criticised by campaigners for delivering too little relief, too slowly.
Ireland itself has no debt to cancel, as it never made loans to developing countries and is not owned money. However, it has contributed €40 million so far to debt-relief efforts and plans to give more.
Mr Kitt said he believed the key to total debt cancellation was additional funding from the wealthy nations.
Donors, particularly the larger economies, would have to increase their overseas aid more rapidly and take "concrete steps" to meeting United Nations targets on aid.
However, the Minister conceded there was no indication that major donors were willing to commit the resources necessary to achieve total debt cancellation.
The existing HIPC initiative was therefore likely to remain the vehicle for delivering debt relief. Although he conceded that the process was not working effectively, he said the Government was prepared to increase funding for debt relief in an enhanced scheme.
Ireland would be contributing €1.5 million to Debt Relief International, a non-profit-making group that is helping HIPC countries manage their existing debt.
Debt-relief campaigners reacted positively to the Government's commitment but expressed disappointment at its claim that debt cancellation was unlikely to happen.
"If debt campaigners had taken this attitude, we wouldn't have had the Jubilee campaign, Bono and the lot. It's a bit defeatist," said Ms Jean Somers, of the Debt and Development Coalition.
Ms Caoimhe de Barra, of Trócaire, said the Government was facing "a credibility gap" because it had reneged on commitments to increase spending on aid to specified targets.
The Minister plans to visit famine-threatened areas of southern Africa late next month.
