Mozambique

Mozambique: Debt payments suspended

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JOHANNESBURG, 16 March (IRIN) - Activists of debt cancellation lobby groups said the announcement on Wednesday that wealthy nations had agreed in Paris to suspend Mozambique's repayments of bilateral debts by one year was welcome, but fell short of their call for cancellation of all debts owed by the flood-stricken nation.
Angela Traves of Jubilee 2000 told IRIN on Thursday: "We are disappointed that the Paris Club of Mozambique's creditors have not met our demand to cancel all of Mozambique's bilateral debts."

The Club members, meeting in the French capital, Paris, said in a statement: "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 until the cancellation under the initiative on the Highly Indebted Poor Countries (HIPC)."

Mozambique has been promised additional debt relief by the International Monetary Fund (IMF) and the World Bank next month under the HIPC Initiative. Under the HIPC initiative, creditor nations last year agreed to cancel two-thirds of Mozambique's public debt, which reduced its annual debt service repayments to the current US $73 million from US $112 million it was paying between 1993 and 1998.

Mozambique's external debt, according to 1998 figures, is estimated at US $8.3 billion, 40 percent of which is owed to bilateral creditor nations, while the remaining 60 percent is owed to the IMF and the World Bank.

Jubilee 2000 estimates that Mozambique, whose infrastructure suffered extensive damage following two months of flooding, is paying US $73 million in debt service every year, which compares with what the country spends on health and education needs combined. The country's annual primary education budget is US $32 million while its primary healtcare budget is US $20 million.

The debt cancellation lobby group estimates that should the IMF and World Bank grant Mozambique further debt relief next month as promised, its annual repayments would amount to US $45 million.

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