Mozambique: The agony continues 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
MOZAMBIQUE, a country of 20 million inhabitants, has just suffered the worst 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.
ERIC TOUSSAINT
OZAMBIQUE, which is one of the poorest countries on the plan-
Let, pays $1.4 million a week in servicing its debt - money it could use to meet the basic human needs of its people.
The country's foreign debt amounts to $8.3 billion (it was $2.9 billion in 1985 and $5.9 billion in 1997). The creditors fall into three groups:
1) the multilateral financial institutions
(World Bank/IMF), who hold S2.1 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").
Ensuring control
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.
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.
16 International Viewpoint #320 April 2000
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).
### Racist aggression
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
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.
A new inconvenience
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 strategic programme for the reduction of poverty 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 strategic programme for the reduction of poverty 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. *
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* Mozambique