TUESDAY, 10.30PM:
THE world’s wealthiest creditor nations, the so-called “Paris Club”, will meet on Wednesday to decide the fate of Mozambique’s debt. The south-east African nation, which is beginning to recover after two decades of civil war, is widely regarded as one of the more deserving nations for debt relief.
However, in an ironic twist, the world’s wealthiest nations may balk at writing off Mozambique’s debts and instead demand that the World Bank make up the differnece with money from its soft-loan window, the International Development Association, which would have the effect of forcing some of the world’s poorest nations to finance the bail-out.
Said Veena Siddharth, a debt analyst with the non-governmental organisation Oxfam International: “In other words, the Nepals and Malawis of this world will be bailing out the Paris Club.”
At issue is a gap of some $350-million between what the Paris Club so far has been willing to write off under the debt initiative for Heavily Indebted Poor Countries (HIPCs), and what the lenders (World Bank and IMF) have agreed should be the Club’s fair share. The initiative’s purpose is to reduce Mozambique’s debt burden to less than 200-220% of the value of its exports, a level deemed “sustainable” by the World Bank and International Monetary Fund (IMF).
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