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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
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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
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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 lmatthew@jubilee2000uk.org; 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: lmatthew@jubilee2000uk.org 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:
1. 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).
2. 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."
3. The main Paris Club members that have promised to cancel 100% of Mozambique's debts are the UK, US, Germany, France and Italy.
4. 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.
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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: patricia.schor@novib.nl
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.
ENDS
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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) ralmeida@bread.org
(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.
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Message-Id: <200003201448.JAA16709@server.africapolicy.org> From: "APIC" <apic@igc.org>Date: Mon, 20 Mar 2000 09:36:52 -0500Subject: Africa: Debt Action Documents
Editor: Ali B. Ali-Dinar
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