Jubilee 2000 welcomes Mozambican debt service freeze to UK and calls on creditors to cancel 100%

With reports that the floods in Mozambique are likely to get worse in the next few days, Clare Short announced yesterday (28 February) that the British government has stopped collecting her debt repayments. The announcement followed growing concern from parliamentarians and the general public about the immorality of collecting debt service payments whilst floods devastate Mozambique.

Clare Short's announcement was confirmed by Gordon Brown during a European Union meeting in Brussels. "We must think what we can do to help Mozambique's economic development out of its current problems," Brown, Britain's Chancellor of the Exchequer, told reporters during a break in a meeting of EU finance ministers. "We would like other countries to follow our lead and provide 100 percent relief of the bilateral debts of Mozambique." Brown also said the International Monetary Fund (IMF) and World Bank should also see what could be done to help Mozambique.

Jubilee 2000 welcomed the announcements, but emphasised the urgent need for action to be taken by the whole international community to address Mozambique's debts. The UK is owed just $150 million by Mozambique (out of a total debt of over $5billion), and without further action by other creditors including the IMF and World Bank, the debt burden in Mozambique will remain a severe barrier to reconstruction and long-term economic development.

Mozambique is currently paying $1.4 million every week to the International Monetary Fund, the World Bank and western governments. It is due to receive some debt cancellation in April 2000. However, the extra relief will amount to approximately $250 million (NPV), and will leave Mozambique with annual average payments of $57 million, more than is spent on primary health and education combined..

In a letter to the editor of the Times of London on the 28^th February, Ann Pettifor, Director of Jubilee 2000 coalition called for the creditors to fulfil their obligations on debt alongside the aid effort now being mobilised for Mozambique. She noted that Mozambique qualified before the G7 summit in Cologne for debt cancellation, having carried out years of strict economic austerity measures under the IMF.

Pettifor said: "Receiving the G7's promised further debt cancellation should have been a slick process. In the hands of Western creditors it has turned into a cumbersome series of excuses and delays. The president of the World Bank, James Wolfensohn, said that the hold-up in debt relief for the poorest countries was "delay for delay's sake". This situation in Mozambique - half a million homeless, the threat of epidemics caused by water-related diseases, the devastation of thousands of acres of farmlands - can only get worse. It is the creditors' turn to fulfil their obligations and at the very least deliver on promises made last June. There is no excuse for delay."

Jubilee 2000 backed the call of Graca Machel (former First Lady of Mozambique) for the cancellation of all Mozambique's foreign debt. "These floods are yet another reason for the international community to consider additional measures, such as the cancellation of the debt," she told Portugal's Antena Um radio.

Ann Pettifor, Director of Jubilee 2000 Coalition, said: “The British government has taken an important and welcome unilateral step. However overall debt cancellation for Mozambique is dependent upon the IMF's agreement.

“Unless there are real improvements to the IMF debt reduction package agreed last year, Mozambique will still be paying a million dollars each week to lenders in the west - instead of rebuilding the shattered lives of its people. The world's leaders must do better.“

See also:

• Mozambique suffers worst flooding for 30 years, but continues to pay $1.4 million a week in debt repayments. Jubilee 2000 calls on creditors to act and cancel the debts (23 February 2000).
• Full briefing on Mozambique