2 July 2008
Maputo — Portugal has cancelled Mozambique's remaining debt to Lisbon, estimated at 393.4 million US dollars, accumulated since shortly after independence until 2005.
An agreement to that effect was signed in Maputo on Tuesday between Mozambican Finance Minister Manuel Chang and his Portuguese counterpart Fernando Teixeira dos Santos.
Negotiations about the debt had begun in late 2005 and, a few months ago, the technical negotiations were completed, thus making it possible to sign Tuesday's agreement. Most other European creditors had cancelled Mozambique's debts long ago.
Chang described the debt cancellation as an acknowledgement by Portugal of the achievements of the Mozambican government in implementing programmes aimed at growth and the socio-economic development of the country. He said that money that would have otherwise gone towards servicing the debt to Portugal could now be used to finance activities included in the government's Action Plan for the Reduction of Absolute Poverty (PARPA).
For his part, Teixeira dos Santos said that writing off this debt is in line with a commitment by Portugal, as a member of the "Paris Club" of creditor nations, to cancel the debts of Highly Indebted Poor Countries (HIPC).
"This was part of an international initiative. Portugal joined this initiative, which is not only bilateral between Mozambique and Portugal, but involves the international community, the International Monetary Fund and the World Bank to relieve debts of the Highly Indebted Poor Countries. Mozambique has been meeting its development challenges and has deserved special attention from the international community', he said.
In fact, Portugal has dragged its feet in implementing its HIPC undertakings. Explaining this delay, Teixeira dos Santos told reporters that, though negotiations started in 2005, the final agreement was only signed now because Portugal itself had been facing a serious financial crisis as a result of its budget deficit, 6.1 per cent, well above the 3 per cent acceptable to the European Community.
He claimed that, before writing off the debt, Portugal had first to stabilize its own economy, which was finally achieved.
"After we corrected the deficit, now we have enough space to meet this Mozambican interest in writing off the debt", said the Portuguese minister. "A month after we gained acknowledgement from the European Commission that we have lowered our deficit to less than three per cent, we are here, in Mozambique, to say that now we are in a fit condition to cancel the debt".
Besides this agreement, the two countries also signed other memoranda, namely a tripartite agreement to grant a 100 million Euros (148 million US dollars) loan, and another on technical cooperation between the two countries' Finance Ministries.
The tripartite agreement was signed between the two Finance Ministries and the Portuguese state bank, the Caixa Geral de Depositos (CGD). This credit will be used to develop socio-economic infrastructures in the areas of agriculture, energy, public works, industry and trade.
On technical cooperation, the two ministries intend to design programmes and step up technical assistance in the areas of customs, public purchases, public debt, planning and international relations, taxes, financial inspections, budgeting and public accounting.
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