MOZAMBIQUE: Debt hampering reconstruction

The Southern African nation of Mozambique currently spends twice as much servicing its debt as it is able to spend on education and three times the amount it is able budget for health care, Christian Aid Director Daleep Mukaraji told IRIN on Thursday. Speaking from London in a telephone interview, he said repayment of Mozambique's debt, even under the new World Bank (WB) and International Monetary Fund (IMF) relief initiative, was hampering the country's ability to rebuild itself. "Because of its enormous debt, the Mozambique government has had to cut back on social spending and that in a country which is desperately trying to rebuild itself after a long civil war," he said. Mukaraji said that although the initiatives by the WB and the IMF to help countries reduce their debt burdens under the Highly Indebted Poor Countries (HIPC) initiative were welcomed, countries were still having to spend large percentages of their budgets paying off or servicing debt. "In all fairness to the World Bank and the IMF, I have to say that the latest HIPC initiative was too late, takes too long to achieve its goal, and ultimately doesn't really help the local population," Mukaraji said. Mozambique was one of the first countries to be granted HIPC status under which its debt service payment would fall from an estimated US $113 million per year to US $100 million a year. Shortly after the launch of the HIPC initiative in 1996, the Mozambique Vice-Minister of Planning and Finance Luisa Diogo said HIPC would make about US $15-20 million difference a year, while the estimated annual cost of basic health care amounted US $173. "We want to encourage these institutions - the WB and the IMF to become more socially sensitive to what is happening on the ground," Mukaraji said. "They need to consider the health care and educational dimensions to their programmes." In its 1998 National Human Development Report for Mozambique, the UN's Development Programme noted that only 25 percent of children were enrolled in school, with only 40 percent of the population able to read and write. Mukaraji said that although the latest estimate of 11 percent economic growth was impressive, "we have to remember that this is from a very low base." "In such a vast country, geographically, and with a population of about 17 million people, the idea of trickle down economics is just not working," Mukaraji said. Recently South Africa said that it would cancel Mozambique's debt of about US $6.5 million. In his state of the nation address to parliament on 29 March, President Joaquim Chissano said: "Even with the reduction scheduled under HIPC, our debt service will continue to be heavy, absorbing 12 to 18 percent of government income. We hope that the international community will come to realise that the poorest countries cannot develop their potential without total debt cancellation." Christian Aid Week will host a conference in London with special focus on debt relief to HIPC countries from 12-16 May. See also IRIN-SA report, MOZAMBIQUE: despite economic, growth poverty remains.