MOZAMBIQUE: UK forgives US $152 million debt

On Thursday, May 16, Britain announced that it had written off all of Mozambique’s bilateral debt. The US $152 million was scrapped under the Heavily Indebted Poor Countries (HIPC) debt relief scheme, British embassy officials in Maputo said.

Minister for Finance and Planning Luisa Dias Diogo told IRIN: "The forgiveness is crucial in delivering Mozambique's Action Plan for the Reduction of Absolute Poverty. The savings will allow us to spend more money on education, health, infrastructure and rural development. Eighty percent of the population depend on agriculture as a primary source of income," she added.

On the other hand, in the beginning of April, Jubilee 2000 co-coordinator of Economic Justice and External Debt Sector, Gaime Chivite, had said that „the figures may appear encouraging, but it is too soon to judge if the HIPC initiative will have any impact on ordinary people. Most Mozambicans remain poor. In fact the gap between the rich and the poor has widened. Although the government has increased spending on social welfare, it is negligible as to make any difference".

The debt relief was signed late Wednesday, May 15, by Britain's Junior Foreign Minister for Africa, Baroness Valerie Amos, and Mozambican Foreign Minister Leonardo Simao.

Before qualifying for HIPC, Mozambique, one of the world's poorest countries, had a staggering foreign debt of more than US $5 billion. Most of the debt has now been forgiven. Mozambique's debt stands at slightly under US $1 billion.