[stop-imf] Mozambique debt update (fwd)

[Robert Weissman]

Date:          Mon, 3 Apr 2000 15:55:42 +0200
Comit=E9 pour l'Annulation de la Dette du Tiers Monde (CADTM)
Committee for the Cancellation of the Third World Debt (COCAD)
29 rue Plantin
1070 Bruxelles
tel (322) 527 59 90
fax (322) 522 61 27
cadtm@skynet.be
http://users.skynet.be/cadtm

MOZAMBIQUE :=20
Paris Club, World Bank & IMF refuse assistance to a people in=20
distress

By Eric Toussaint

Mozambique, a country of 20 million inhabitants, has just suffered the wors=
t
floods for 30 years. The government estimates the cost of reconstruction at
$250 million. While the industrialized countries point to the emergency aid
they have provided to the victims, they are discreetly demanding that the
Mozambican authorities repay the country's foreign debt.
Mozambique, which is one of the poorest countries on the planet must pay it=
s
debt, money it could use to meet the basic human needs of its people. The
country's foreign debt amounts to $8.3 billion. The creditors fall into
three groups:
1) the multilateral financial institutions (World Bank/IMF), who hold $2.1
billion, or around a quarter of the total (the "multilateral debt");
2) foreign states, who hold $4.3 billion, around half of the total (the
"bilateral debt");
3) private financial institutions, who hold $2 billion, or a quarter (the
"private debt").
So far as the multilateral debt is concerned, the World Bank (WB) and IMF,
instead of simply canceling the debt that Mozambique owes them, have
preferred to postpone some settlement dates and grant some new loans which
the country must use to meet its repayment obligations. The WB and IMF wish
to ensure the continuation of their control over the future of Mozambique.
The bilateral debt, which represents more than half the foreign debt, is
mostly owed to governments in the North - in order, Russia, France, Italy,
Germany, Great Britain, the USA and Japan. Brazil is also an important
creditor. When the Paris Club of bilateral (government) creditors met on 15
March 2000, it failed to agree the cancellation of Mozambique's debt. It
only said that it would defer payments for a few months - but that the mone=
y
would have to be repaid later.
"Our request was for total cancellation" said Mozambique's Foreign Minister
Dr Leonardo Simao. "We continue with that request and with that hope".
As for the private debt, $2 billion is owed to banks in the North, who have
no intention of canceling it.
Human distress was already immense in Mozambique before the floods.
According to the World Bank, 70% of Mozambicans live below the threshold of
absolute poverty. Life expectancy at birth is 46 years: 70% of the
population have no access to health services; 60% of adults are illiterate;
78% of women are illiterate. Out of every 1,000 inhabitants, 3 possess a
telephone connection (against 564 in France), 3 have a television (598 in
France) and 0.8 a computer (150 in France).
The country cannot be criticized for spending too much on arms - the armed
forces were reduced by 2/3 between 1985 and 1997 (one of the biggest falls
recorded in the whole world). How, then, did Mozambique get into debt? It
can be said without fear of contradiction that the country's debt is the
consequence of aggressions launched by the racist regime in South Africa in
the 1970s and 80s. With the aim of overthrowing the progressive Mozambican
regime (in the mid 1970s, Mozambique won its independence through a
liberation struggle led by FRELIMO and thanks to the April 1974 revolution
in Portugal), the apartheid regime supported a far right guerrilla movement
(RENAMO) which devastated the country.  Mozambique had to get into debt to
organize its defense against this external aggression and attempt to rebuil=
d
itself.
After some years of strict application of the economic reforms demanded by
the IMF and the WB, Mozambique should in principle have benefited from a
cancellation of its foreign debt. To obtain this commitment of cancellation=
,
the Maputo regime accepted a neoliberal policy which increased social
inequalities and poverty. Some public enterprises were privatized. In
December 1998, in the framework of the Initiative for Heavily Indebted Poor
Countries, a debt cancellation of as much as 80% was to have been obtained.
But the WB and IMF told the authorities in Maputo that in reality the
country would in the future repay the same sum it had paid until then -
around $100 million per year. In the Mozambican parliament, majority and
opposition came together to adopt a resolution demanding the total
cancellation of the foreign debt. In the weeks that followed, international
NGOs, European parliamentarians and other pressure groups denounced the
avarice of the WB and IMF. Under pressure, these latter announced a scaling
down of their demands. Instead of $100 million, they would be happy with $7=
3
million for 1999.
In June 1999, the G7 summit held in Cologne committed itself to cancel 90%
of debts. In September 1999,  at the annual summit, the IMF and the WB
announced that henceforth they would give absolute priority to the reductio=
n
of poverty. Mozambique was in a very good position to accede to an
additional lightening of its burden. Then a new inconvenience - to concede
this latter the Bretton Woods institution added a new condition. From
January 2000, the authorities in Maputo were asked to draw up a "Poverty
Reduction Strategic Paper" (PRSP) in consultation with Mozambican civil
society. The government replied that time was too short and demanded the
implementation of the measures of debt forgiveness announced in Cologne and
Washington. Just before the disaster caused by the flooding in February
2000, the WB and the IMF announced that they would grant no forgiveness
until this "Poverty Reduction Strategic Paper" (PRSP) was drawn up.
But surely they would change their attitude after the drama of the flooding=
?
Not in the least - instead of canceling their claims, these institutions
decided to furnish aid in the form of loans which have to be repaid. It's
time to tell the WB, IMF and creditor governments that Mozambique has
suffered enough - we demand the total cancellation of the country's public
foreign debt and the abandonment of the structural adjustment plans.


Note: Evolution of Mozambique's foreign debt.
1985: $2.9 billion.
1997: 5.9.
2000: 8.3.