Mozambique, a country of 20 million inhabitants, has just suffered its worst floods for 30 years. The government estimates the cost of reconstruction at US$250 million. While governments of the industrialised countries point to the emergency aid they have provided to the victims, they are discreetly demanding that the Mozambican authorities repay the country's huge foreign debt.
The country's foreign debt amounts to US$8.3 billion. The creditors fall into three groups: 1) the multilateral financial institutions (World Bank/International Monetary Fund, which hold US$2.1 billion — the "multilateral debt"); 2) foreign states, which hold US$4.3 billion (the "bilateral debt"); 3) private financial institutions, which hold US$2 billion (the "private debt").
So far as the multilateral debt is concerned, the World Bank and IMF, instead of simply cancelling the debt that Mozambique owes them, have preferred to postpone some repayment dates and grant some new loans which the country must use to meet its repayment obligations. The World Bank 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, Britain, the USA and Japan. Brazil is also an important creditor.
When the Paris Club of bilateral (government) creditors met on March 15, 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 Leonardo Simao. "We continue with that request and with that hope."
According to the World Bank, 70% of Mozambicans live below the threshold of absolute poverty. Life expectancy 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 1000 inhabitants, three possess a telephone connection (against 564 in France), three a television (598 in France) and 0.8 a computer (150 in France).
The country cannot be criticised for spending too much on arms — the armed forces were reduced by two-thirds between 1985 and 1997 (one of the biggest falls recorded in the whole world).
Defence debt
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 guerilla movement, RENAMO, which devastated the country.
Mozambique had to get into debt to organise its defence 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 World Bank, Mozambique should in principle have benefited from a cancellation of its foreign debt.
To obtain this commitment of cancellation, the Maputo regime accepted a neo-liberal policy which increased social inequalities and poverty. Some public enterprises were privatised. 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 World Bank 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 US$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 non-government organisations, European parliamentarians and other pressure groups denounced the avarice of the World Bank and IMF. Under this pressure, they announced a scaling down of their demands. Instead of US$100 million, they would be happy with US$73 million for 1999.
In June 1999, the G7 summit of major industrial powers held in Cologne committed itself to cancel 90% of debts. In September 1999, the IMF and the World Bank announced that henceforth they would give absolute priority to the reduction of poverty.
'Poverty reduction'
Mozambique was in a very good position to accede to an additional lightening of its burden. Then the World Bank and IMF 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 World Bank and the IMF announced that they would grant no forgiveness until the PRSP was drawn up.
But surely they would change their attitude after the drama of the flooding? Not in the least. Instead of cancelling their claims, these institutions decided to furnish aid in the form of loans which have to be repaid.
It's time to tell the World Bank, 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.
[Abridged from Committee for the Cancellation of the Third World Debt, 29 rue Plantin 1070, Brussels. Phone (322) 527 59 90. Fax (322) 522 61 27. Email: <cadtm@skynet.be>. Web: <http://users.skynet.be/cadtm>.]
BY ERIC TOUSSAINT