Mozambique Hurt by Debt Cancellation Refusals
by Eric Toussant
(Continued from http://a16.monkeyfist.com/?id=397)
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 money 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
rebuild 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
$73 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 reduction 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.
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