ISGN > Publications > JUBILEE, DEBT AND THE IMF

Philippine-Asia Jubilee Campaign Against the Debt (PAJCAD)
c/o the Resource Center for People’s Development (RCPD)
E-mail: rcpd@info.com.ph

and Our Lady of the Holy Rosary Parish
E-mail: "Fr. Albert Suatengco" AS415@info.com.ph

March 13, 2000

No words can aptly express our deepest sympathies to 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 thousand of lives lost that continue to increase as the days move on.

But what is more tragic for the people of Mozambique is the World Bank’s hard-line stance to simply 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 organizations.

Furthermore, the World Bank, trying to appear charitable in helping the people rise from the catastrophe, merely gives out new loans instead of grants to Mozambique to cope with the emergency situation.

As of 1998, Mozambique has a total debt of $8.3 billion ($4.3 billion in bilateral debt, $2.1 billion in multilateral debt and $2 billion private debt). Certain creditor-governments in the North have made pledges to cancel Mozambique’s bilateral debt, with UK taking the lead to cancel $ 150 million.

But one wonders, where this bilateral debt cancellation goes. Will it be another drop in the ocean of third world debts that is intended to beef up the 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" initiative is not only proven inadequate but also immoral and self-serving for the interests of international finance institutions (IFIs) who wanted to maintain the legitimacy of debts already defaulted by HIPC countries for years now. And the IFIs call it debt cancellation when in fact it is plain and simple facelifting of their books to ensure "sustainable debt servicing" by HIPCs based on structural adjustments. It is even worse because structural adjustments leave HIPCs in a no-win situation where the countries are pulled further down into perpetual indebtedness and underdevelopment at the mercy of global monopoly capital.

Mozambique’s experience on HIPC is telling enough. After passing to be qualified for HIPC, Mozambique is still left with annual average debt payments of $73 million (or $ 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 has yet to be ascertained.

Given this appalling situation, it is completely impossible for Mozambique to rebuild itself unless their scarce resources are channeled into the real needs of its people. There is simply no way they can pay these debts, which, in the first place, have been paid a thousand times over by the Mozambican people. It is immoral and unjustifiable on the part of the IFIs and creditors to continue collecting debt payments and add on its emergency aid as new loans, even if this is collected after a year of moratorium.

The experience of Honduras and Nicaragua after Hurricane Mitch are enough to say that unless genuine total and immediate debt cancellation is made, no genuine reconstruction is possible at the cost of further indebtedness. 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 given the vast assets and resources they have at hand and should stop from peddling around "moratoriums" or bilateral debt cancellations as charitable acts in the name of Jubilee and emergency aid. And worse, putting all this in the basket of the HIPC initiative as conditions for debt cancellation.

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 or its other namesakes such as PRGF/PRSP as a sham that completely negates the spirit of Jubilee.

We support the Mozambican people and the Mozambique government in their option of unilateral debt repudiation as an exercise of sovereign right as a nation and people, should the IFIs insist on their insidious position and refuse to heed the legitimate and moral basis of total and immediate debt cancellation.

Fr. Albert Suatengco
National Coordinator
Philippine-Asia Jubilee Campaign Against the Debt (PAJCAD)