On March 16, the Paris Club of rich creditor countries announced a suspension of Mozambique's debt repayments until July, following the floods that devastated the country earlier this month. The Jubilee 2000 coalition, which campaigns for the cancellation of Third World debt, has called on the rich countries to immediately cancel Mozambique's entire foreign debt.
The following is abridged from a statement issued by the Philippine-Asia Jubilee Campaign Against the Debt (PAJCAD) on March 13.
No words can aptly express our deepest sympathies for the people of Mozambique who continue to suffer the aftermath of the devastating floods that hit their country these past weeks. Over a million homeless, thousands of hectares of agricultural lands destroyed, not to mention the thousands of lives lost.
But what is more tragic for the people of Mozambique is the World Bank's hard-line stance to give only a one-year moratorium on debt payments, despite strong appeals for immediate and total debt cancellation by the Mozambique government and people, supported by international Jubilee campaigns and civil society organisations.
Furthermore, the World Bank, trying to appear charitable, merely gives out new loans instead of grants to Mozambique to cope with the emergency situation.
As of 1998, Mozambique had a total debt of US$8.3 billion (US$4.3 billion in bilateral debt, US$2.1 billion in multilateral debt and US$2 billion in private debt). Certain creditor-governments in the North have made pledges to cancel Mozambique's bilateral debt, with UK taking the lead to cancel US$150 million.
But one wonders where this bilateral debt cancellation goes. Will it beef up the Highly Indebted Poorest Countries (HIPC) Trust Fund for Mozambique, to make it appear that all debts remain legitimate after the one-year World Bank moratorium is up?
And as such, will this be tied up again to implementing structural adjustment programs, renamed now as Poverty Reduction Strategy Papers, as a basic requirement or conditionality for "debt relief" under the HIPC and Cologne Initiative?
And what about the multilateral debts owed by Mozambique to the IMF and the World Bank that remain "untouchables" as far as debt cancellation is concerned?
The HIPC and Cologne "debt relief" initiatives have not only proven inadequate but also immoral and self-serving for the interests of international finance institutions, which want to maintain the legitimacy of debts already defaulted by the HIPCs for years now.
Mozambique's experience as an HIPC is telling enough. After qualifying for HIPC status, Mozambique is still left with annual average debt payments of US$73 million (or US$1.4 million a week) while its annual budget for primary health is only $20 million and a mere $32 million for primary education.
Initial estimates put the cost of reconstruction and relief operations at hundreds of million of dollars. The full magnitude and long-term scars of the flooding have yet to be ascertained.
Given this appalling situation, it is completely impossible for Mozambique to rebuild itself unless its scarce resources are channelled into the real needs of its people. There is simply no way it can pay these debts, which have been paid a thousand times over by the Mozambican people.
The experience of Honduras and Nicaragua after Hurricane Mitch is enough to say that unless there is a total and immediate debt cancellation, no genuine reconstruction is possible. The World Bank is now recycling for Mozambique the same package it did for Honduras and Nicaragua.
The Philippine-Asia Jubilee Campaign Against the Debt (PAJCAD), in solidarity with the people of Mozambique and the appeals already made by the international community, urges the international financial institutions and creditor countries to immediately cancel all bilateral and multilateral debts of Mozambique with no conditions attached.
The IMF and the World Bank must cancel all debts owed to them by Mozambique and should stop peddling "moratoriums" or bilateral debt cancellations as charitable acts.
In this light, PAJCAD reiterates its demand for the immediate and total cancellation of all Third World debts, and its total objection to the HIPC scheme or its other namesakes.
[PAJCAD can be contacted c/o the Resource Centre for People's Development at <rcpd@info.com.ph>.]