[stop-imf] World Bank Inhuman over Mozambique (fwd)

[Robert Weissman]

JUBILEE GAUTENG (South Africa)
PRESS RELEASE
14 March 2000

WORLD BANK IS INHUMAN OVER MOZAMBIQUE DEBT CANCELLATION!

At a meeting of Jubilee 2000 South Africa's GAUTENG branch today, the
duplicitous attitude of the World Bank on the Mozambiquean debt at
this time of crisis in the country was condemned in the strongest of
terms.

The World Bank representative in Maputo, James Coates, promised in the
aftermath of the floods that "all the debt service of Mozambique to
the World Bank in the next 12 months will be forgiven", and put this
at a figure of US$10 million. This was contradicted by the World
Bank's expert and spokesman on the issue, Jeff Katz. The World Bank
has, in fact, merely decided to DELAY repayment, not CANCEL,
Mozambique's enormous foreign debt. Mozambique will not be expected to
service the debt for 12 months, but will have to pay larger amounts
after this period. 

As activists in the struggle for social justice, Jubilee 2000 Gauteng
are appalled by the two-faced attitude displayed by the Bank's Maputo
and Washington officers.

Repaying the foreign debt currently costs Mozambique US$1,4 million a
week, eating up one fifth of the country's export earnings each year.
Mozambique's total debt stands at US$8,3 billion, a huge burden on one
of the poorest countries in the world, all the more so in that the
debt is used by the World Bank as a means of imposing its structural
adjustment policies on the country.

Jubilee 2000 demands an immediate write-off of all Third World debt,
plus reparations for the social, ecological and economic devastation
that have accompanied the Third World debt crisis.

In its time of severe need, Mozambique is the right place to start,
with full cancellation. The World Bank is showing its true colours
with its mean approach, misleading Mozambique's people and demanding
the debt repaid, later, when world sympathy for Mozambique's plight
has ebbed.

For these reasons, Jubilee Gauteng joins social movements across the
world, during the course of the next month, prior to the World
Bank/IMF annual spring meetings in Washington to be chaired by Trevor
Manuel, SA's finance minister, in demanding the World Bank and all
international creditors cancel all debt. The World Bank's devious
approach to Mozambique also underlines our call for the Bank and IMF
to be shut down, as dangers to peace and prosperity in one of the
world's poorest countries.

For information, call Louis Mofokeng, Nicholas Dieltiens or George
Dor, Jubilee 2000 Gauteng, at 648-7000.


(The information below comes from the premier english-speaking
journalist and research on Mozambique economic affairs, Dr Joseph
Hanlon..)

------- Forwarded Message Follows ------- >>> Joe Hanlon
<J.Hanlon@open.ac.uk> 03/14 2:35 am >>>

NO WORLD BANK DEBT CONCESSION.

THERE IS NO EXTRA $10 MILLION.

WAS THE WORLD BANK INTENTIONALLY MISLEADING?

The World Bank is giving Mozambique no extra debt cancellation, Jeff
Katz, the World Bank's expert and spokeman on the issue, told me
Monday evening 13 March. The Bank is merely rearranging debt relief
which will be given to Mozambique next month under the enhanced HIPC
initiative (known as HIPC-2) proposed by the G8 at Cologne last year
-- and which was planned before the floods. 

The World Bank proposes that Mozambique not make any debt service
payments to it in the next 12 months, but the money will need to be
paid later -- it is not being written off.

"In the first year we will forgive 100 per cent of debt service
payments, which means in later years we will forgive less than we had
previously planned," Katz explained. In the jargon of debt relief, "it
is front-loading of HIPC-2", he said.

Mozambique would have paid $10 million to the World Bank in the next
year. Under HIPC-2, this would have been reduced, perhaps to $5
million. With the front-loading in response to the floods, this will
instead be reduced to 0 for the first year, but the $5 million will
still have to be paid -- but in future years rather than this year.

In a letter to the Maputo daily Metical published Monday 13 March, the
World Bank representative in Maputo, James Coates, wrote: "we are
proposing that all the debt service of Mozambique to the World Bank in
the next 12 months will be forgiven. We are not talking about a
rescheduling. The value of this promise on debt service (which
includes interest and capital repayments) is estimated at $10
million."

The Portuguese original is: "estamos a propor que todo o servico da
divida de Mocambique ao Banco Mundial nos proximos 12 meses seja
perdoado. Nao se trata de um rescalonamento. O valor do compromisso
deste servico da divida (que inclui juros e amortizacao de capital
sobre creditos por pagar) esta estimado em 10 milhoes USD."

This is at best misleading. Katz said: "This is not a deferral or
rescheduling, but it is not additional money to HIPC-2. It is just
speeding up HIPC-2 debt relief."

This is juggling with words. In laypersons language, it IS a deferral
or rescheduling, since the money is to be paid at a later date instead
of this year. In no way is any additional debt service being
"forgiven". After 10 years, Mozambique will have paid the same amount
of money.

Mozambique will gain from HIPC-2 . Annual debt service will fall from
about $75 million per year agreed last year under HIPC-1 to about $45
million per year. But this is independent of the floods. Mozambique
gets not an extra penny in debt cancellation from the World Bank
because of the floods. "Front-loading" simply takes money from one
pocket and puts it into another -- there is no extra money.

Joseph Hanlon
London 14 March 2000, 0015 GMT

For information, call Louis Mofokeng, Nicholas Dieltiens or George
Dor, Jubilee 2000 Gauteng, at 648-7000.