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The PARPA: Towards achieving results - May 2002
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| 2. The ‘PARPA’ and the HIPC27 |
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However, in order for the ‘PARPA’ to be implemented, the country will have to incur a new debt, in the region of US$ 1,8 billion. Of this amount 34 per cent will go towards education, 32 per cent for infrastructure, 25 per cent for health and the remaining 8 per cent for the agricultural sector. Of these amounts, more than 55 per cent are for operational costs and about 36 per cent are for construction works. But the fact remains that the ‘PARPA’ is a condition for a final forgiveness of external debt, the so-called HIPC2, which in Mozambique’s case is in the region of US$ 2 billion. In other words, the writing off of a debt of US$ 2 000 000 000 necessitates the incurring of a new external debt in excess of US$ 1 800 000 000. And, as if this were not enough, the majority of the foreseen obligations are for covering expenditures in sectors which were targeted with the adoption of the structural readjustment at the end of the 1980s, when the country was forced to substantially reduce public expenditure.
To sum up, for the debt to be forgiven, one is forced to incur a new debt in order to invest in sectors where those who are forgiving the debt forced a reduction of expenditure when the primary debt was incurred.
So what is happening? In the name of controlling inflation, and in defence of the operation of the free market, during the decade of the1990s the country adopted the measures recommended to achieve structural readjustment. At the time a peculiar situation was experienced, because of the end of the war between the Government and RENAMO and the end of the apartheid regime in the neighbouring Republic of South Africa. Public expenditure was drastically reduced in relation to revenues (the end of the war greatly contributed towards this, but there were significant cuts carried out in the sectors of education, health and public works8 ), state enterprises were privatised and the currency devalued so as to achieve international parity and attract foreign investment. There is no doubt that there was economic growth; there can be no doubt either that significant improvements in the living conditions of the people were registered, including those living in rural areas.9
However, the growth rate among the rural poor was not maintained; in addition, it did not accompany the country’s rising economic growth rate. Consequently, poverty became a real concern. Moreover, one could not foresee when it would be overcome. So, there were fears that poverty would generate instability, that it would increase the investment risk and that this, in turn, would result in capital flight. The problem of poverty became a pressing issue in our daily lives. Structural readjustment, in itself, did not succeed in providing a perspective on the eradication of absolute poverty. Why not?
On another occasion I had the opportunity to say that, among the main difficulties in the implementation of the neo-liberal models, the following must be noted: (i) contrary to theoretical presuppositions, in the ‘real’ world the markets are imperfect, incipient or simply non-existent; (ii) the “invisible hand of the market” by itself brings external factors to bear, particularly against women (owing to the opportunity costs of the work time) and the environment (as a result of ‘uneconomical’ economies of scale); (iii) it has been established that savings have leaned towards mercantile capital, becoming international, to the detriment of productive investment at national level; (iv) rural families do not have access to sufficient savings which in turn would afford them options in accordance with the economic rationality of the market.10
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Footnotes:
- HIPC—Heavily Indebted Poor Countries Initiative; this refers to the second package for debt forgiveness.
- Expenditure on Education and Health fell from 21,9% in 1985 to 13,8% in 1990, in: PNUD, Relatуrio Nacional de Desenvolvimento Humano de Moзambique, Maputo, 1998. See also, Van de Walle, N. 2001. Reforma Econуmica em Бfrica, 1980-2000: padrхes e condicionalismos, Dom Quixote, where reference is made to the similarity of results in many other African countries.
- There are those who argue that the structural adjustment resulted in the real impoverishment of the rural families; however, statistics prove that there was an improvement in the income at rural levels, when one compares to the period which preceded the war. If it is true that the end of the war greatly contributed towards this, it is also true that the perspective of the end of a centralised economy contributed also towards the end of the war.
- Negrгo, Josй. 2001. Como induzir o desenvolvimento em Бfrica. CEsA/ISEG, Col. Doc. Trab. No.61, Lisbon.
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