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Note: This document is from the archive of the Africa Policy E-Journal, published
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Africa: Debt Action Documents
Africa: Debt Action Documents
Date distributed (ymd): 000320
Document reposted by APIC
+++++++++++++++++++++Document Profile+++++++++++++++++++++
Region: Continent-Wide
Issue Areas: +economy/development+ +US policy focus+
Summary Contents:
This posting contains several documents relating to action on
debt cancellation for African countries. As noted in the
first, a press release from Jubilee 2000 UK, the Paris Club
meeting last week decided on postponement but not cancellation
of Mozambique's debt, despite calls for cancellation from the
government of Mozambique, Southern Africa Development
Community heads of state, and international debt campaigners.
A note from NOVIB in the Netherlands, with a policy brief from
Oxfam International, raises the general issue of the
inadequacy of "debt relief" policies based on assumption of
"normal" years.
The third item is an action alert from Bread for the World,
which points out that U.S. administration commitments on debt
relief -- in general or for Mozambique -- are meaningless
unless Congress appropriates the necessary funds. While the
action suggestions contained in the latter alert, concerning
congressional action expected this week, are particularly
appropriate for U.S. readers, the background implications are
significant for anyone concerned with Africa's debt.
A posting also sent out today includes a status report and
reflections from the Zambia Jubilee 2000 campaign.
For additional links on debt, see
http://www.africapolicy.org/action/debt.htm
For additional links on the Southern Africa floods, see
http://www.africapolicy.org/action/floods.htm
+++++++++++++++++end profile++++++++++++++++++++++++++++++
APIC Reminder
The third session of the APIC/ECA Electronic Roundtable
"International Policies, African Realities" opened last week,
with the first panel presentations on Peace and Security.
Panelists so far include George Wachira, Nairobi Peace
Initiative; Mohamed Sahnoun, Eminent Persons Group on Curbing
Illicit Trafficking in Small Arms; and Jakkie Cilliers,
Institute for Security Studies. Additional panelist
presentations and responses are coming this week, to be
followed by opportunity for participants' comments. For more
information, including a full archive of the Roundtable to
date, see
http://www.africapolicy.org/rtable
Mozambique
Lenders Fall Short Of African Leaders' Call
JUBILEE 2000 (UK)
March 17, 2000
[For more information, contact Lucy Matthew: Tel 207 739 1000
ext 242 or 7970 175 324; Email [email protected]; Fax
207 739 2300
Lucy Matthew, Press Office Jubilee 2000 Coalition, 1 Rivington
St, London EC2A 3DT Tel: 0171 739 1000 ext 242 Mobile: 07970
175324 Fax: 0171 739 2300 Email: [email protected]
For the latest information on debt and the Jubilee 2000
campaign, visit our website at http://www.jubilee2000uk.org]
London - Western governments have failed to respond to an
unprecedented appeal by African leaders for the complete
cancellation of the debts of flood- stricken Mozambique.
Meeting last night, the 'Paris Club' of major lending
governments announced a temporary freeze on Mozambique's debt
payments to them - but they failed to agree the outright
cancellation of the debt demanded by African heads of state on
Tuesday, to allow more money to be invested in reconstruction
following the effects of Cyclone Eline.
Some Paris Club members, including Britain, have unilaterally
announced full cancellation but the move has not been embraced
by all government creditors. The group is owed 40 per cent of
Mozambique's debt.
Jubilee 2000 today responded with disappointment to last
night's announcement. While welcoming the decision to stop
taking payments from Mozambique, the campaigning group pointed
out that without further action, the country will be left with
debts of up to $2 billion.
Ann Pettifor, director of Jubilee 2000 Coalition, said, "It is
some comfort for Mozambique that no payments will be taken
from Paris Club members in the coming months. But this is not
the immediate and total cancellation that leaders of Southern
Africa have called for. In a few months' time, Mozambique will
once again be paying foreign creditors almost a million
dollars a week. The World Bank, the IMF and Paris Club members
who have not agreed to cancel 100 per cent must do so now."
The IMF and World Bank (owed 25 % of Mozambique's debts) will
be under scrutiny on April 7th, when they too will be under
serious pressure to respond.
Notes for Editors:
- Paris Club announcement (16.3.00): To help Mozambique face
its current exceptional state of emergency following the flood
it suffered, the Paris Club will defer all payments due by
Mozambique on its external debt service until the cancellation
under the Initiative on the Heavily Indebted Poor Countries
(HIPC).
- On Tuesday, Botswana President Festus Mogae said."This is
the time for the international community to show empathy with
the people of Mozambique by heeding our call for debt
cancellation."
- The main Paris Club members that have promised to cancel
100% of Mozambique's debts are the UK, US, Germany, France and
Italy.
- Mozambique's Debt: $6.4 billion(1998) - $4.3 billion in
bilateral debt (estimated $3.4 billion to Paris Club members)
- $2.1 billion in multilateral debts (World Bank, IMF, African
Development Bank) $2.0 billion is owed in private debt
Mozambique received some debt relief in June 1999 ($3.7
billion), which resulted annual payments dropping from $112
million to an estimated $73 million. Mozambique is waiting for
further debt relief (promised last year, now scheduled for
April 2000) which would further reduce payments to $45
million.
Current debt service: $1.4 million a week Aid given so far:
$150 million dollars for emergency aid and reconstruction
costs (the costs of reconstruction are currently estimated at
$250 million) New Loans given so far: World Bank $2.5 million
emergency loan. There are plans for a $15 million World Bank
loan in the near future.
Patricia Aeilkema-Schor
Programme Officer Lusophone Africa
East and Southern Africa Department
Novib
P.O.Box 30919; 2500 GX
The Hague; The Netherlands
tel: +31-70-3421655; fax: +31-70-3614461
e-mail: [email protected]
web: http://www.novib.nl
Oxfam International
Policy Brief
March 13, 2000
MOZAMBIQUE: Getting it right now
The international community responded too slowly to the floods
that struck Mozambique on 3 February. It must now move quickly
to deliver reconstruction aid, organize relief and
rehabilitation programs in close collaboration with the
Mozambican authorities and civil society, cancel Mozambique's
debt, and ensure that donors stay with the country for the
long haul.
About a million people have lost their livelihoods, their
houses, their tools and seeds and their livestock, leaving
them vulnerable - not just now, but long into the future. But
beyond this immediate human cost, the floods shattered much of
what was a very fragile infrastructure. A poor country, but
one successfully overcoming its legacy of war, has been dealt
a crippling blow.
The cyclone destroyed a key rail link on which fuel and goods
were brought in from Zimbabwe and South Africa. Hundreds of
kilometers of roads - fundamental, among other things, to
Mozambique's market reforms - have been washed away, and
electricity and telephone lines downed. This damage will cost
millions to repair; the government's early estimate is $250
million.
More than 140 schools were destroyed in three provinces by the
end of February, and many more will have been destroyed since.
Health centers have also been wrecked. The government's
capacity to deliver important social services has been
decimated.
Before the floods, Mozambique was one of the poorest countries
in the world, but nonetheless one of Africa's success stories
in the way it set about reducing poverty, promoting economic
growth and building democracy. Mozambique should be
recognized for its efforts to implement a major structural
reform program. GDP increased by more than 10% in both 1997
and 1998, while an inflation rate of 70% in 1994 fell to only
6% by 1997.
But major challenges to poverty reduction and development
remain following 16 years of devastating civil war. More than
11 million people lived below the poverty line even before the
floods - and this in a total population of 16 million. Ten
million people did not have adequate drinking water. Two out
of every three adults can't read or write - and two thirds of
these people are women. More than 1.5 million Mozambique
children are not in school. One in five children die before
their fifth birthday.
The country has a major debt problem. In June last year, its
foreign creditors reduced Mozambique's debt repayments from
just over $100m a year to around $71m. The country was due to
pass through another debt reduction threshold earlier this
year - called HIPC2 (the Heavily Indebted Poor Country
initiative). However, the date was pushed back to April/June
because the World Bank and the International Monetary Fund
(IMF) were unsatisfied with the standard of Mozambique's
national plan to reduce poverty.
The new reduction would have decreased Mozambique's annual
debt service to around $45m. But even this reduced figure is
far too tough. For example, the country can only afford to
spend $20m on primary health care and just $32m on primary
education - and this before the floods, and the massive
clean-up and reconstruction costs it is now facing.
The Mozambique floods highlight a crucial weakness of current
orthodoxy on debt relief, based as it is on debtor countries'
ability to service debts in "normal" years. Countries can be
vulnerable to routine or exceptional droughts or floods, armed
conflict and other natural disasters, resulting in years of
recovery that are not normal. Therefore, their ability to
service debts can not be based on the assumption that such
disasters will not occur, this has to be programmed into
debtor countries calculations of ability to service debts and
special treatment should be given when needed.
The response needed:
- Mozambique now needs immediate 100% debt cancellation from
both multilateral and bilateral creditors. Debt relief is not
an option. Rapid progress through HIPC2 will still leave debt
servicing at $45m a year. It is unacceptable that a country
recovering from the devastation of these floods, coupled with
long-term major challenges in poverty reduction, should
continue to service foreign debt. Mozambique's major creditors
- especially the World Bank, the IMF, the African regional
development banks, France and Italy - should follow the
example of countries that led the way on debt cancellation.
- Debt cancellation must come from additional resources and
not in lieu of reconstruction aid which donors should also
give- both are needed. This will require creditor governments
to cancel all debt owed to them, and for governments and the
World Bank and IMF to provide the necessary finance to cover
multilateral commitments.
- The HIPC Trust Fund must be fully funded. The HIPC Trust
Fund is presently underfunded with, for instance, the US
resisting such financing. France and Italy are key creditors
and must move quickly to full cancellation.
- Donors must give reconstruction aid swiftly to help rebuild
Mozambique's infrastructure, and to get education, health and
other services running again. If it takes, for example, two
years to rebuild destroyed schools, that is not just a delay
in recovery - it also means thousands more illiterate
Mozambique children. These children will have lost the chance
to escape poverty and contribute to the return to the progress
that their country had achieved over the past eight years.
Donors should pay for cost of rebuilding schools and health
centers and, at least for a period, pay the day-by-day running
costs of paying teachers, buying school books and so on.
- Donor countries and relief organizations must coordinate and
fully cooperate with relevant Mozambican authorities and civil
society for delivering emergency relief and planning and
realizing reconstruction and rehabilitation programs that will
address long term poverty reduction objectives while
strengthening local and national capacities.
NO MONEY! NO DEBT RELIEF!
For more information:
Ray Almeida
Bread for the World
1100 Wayne Ave., Suite 1000
Siver Spring, MD 20910
(tel) 301-608-2400 ext. 232
(fax) 301-608-2401
(e-mail) [email protected]
(web site) http://www.bread.org
[Note to non-U.S. readers: This document is provided both
for your background information and for possible forwarding
to those of your U.S. contacts you think would be interested.]
Things are not looking good for the supplemental budget at
this point. The week of March 20 is going to tell us a lot
about whether we have a chance to get anything at all from
Congress on debt relief before the end of the year.
Some of us are focused on trying to get authorizing language
for the Heavily Indebted Poor Countries (HIPC) trust fund in
the Senate Foreign Relations bill that Helms and Biden have
been working on. Right now our targets are Hagel, Lugar, Rod
Grams, Chafee, Gordon Smith, Helms, Gramm, Mack and Lott. The
focus here is on getting a clean authorization without
additional conditions attached. Biden wants a clean
authorization; Helms is pushing for a truck load of
conditions.
Others are focused on trying to put pressure on Senate
appropriators to include some money for debt relief in the
supplemental that is scheduled for mark-up next Tuesday.
Right now our targets are McConnell, Specter, Gregg, Stevens
and Leahy. The focus here is on the problem created by the
diversion of policy debates on international financial
institution reform (see above). THE ISSUE IS MONEY! Until
Congress appropriates its share of the international debt
plan, NOTHING is going to happen. In the meantime, the
poorest of the poor in the world's poorest countries,
including Mozambique and Bolivia do not receive an ounce of
relief.
At the moment there is a lot of discussion about the Meltzer
Commission report that was released last week. (MORE POLICY,
NO MONEY!)
BOTTOM LINE: Until Congress appropriates its share of the
money to fund the debt relief plan, no poor person in any of
the heavily indebted poor countries will benefit.
ACTION: Write or call your Senators and ask them to support a
supplemental appropriation of $210 million for debt relief to
help the regional development banks do their part in the
international debt plan.
Points to make in your letter:
The United States has NOT contributed its fair share to the
international debt plan.
Our $210 million contribution is needed NOW to help nearly a
dozen countries like Mozambique and Bolivia that will be
eligible for debt relief this spring.
Debt relief will help Mozambique rebuild long after the
devastation of the recent floods (and after the foreign press
goes home), providing as much as $200,000 per week in
additional resources.
This material is being reposted for wider distribution by the
Africa Policy Information Center (APIC). APIC's primary
objective is to widen the policy debate in the United States
around African issues and the U.S. role in Africa, by
concentrating on providing accessible policy-relevant
information and analysis usable by a wide range of groups and
individuals.
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