The economic well-being of Mauritius and the rest of the developing world does not only hinge on maverick finance ministers. External debt plays an important role in every fiscal ‘state of emergency’.

For third-world optimism, the past two weeks could be labelled a festival. From Jacques Chirac stressing his commitment to a more human approach to globalisation to the World Bank-International Monetary Fund (IMF) meeting to help poor countries, it was 14 days of promises. We also witnessed the caricatural appearance of Bono, lead singer of Irish rock band U2, at the Labour conference lecturing delegates about developing countries’ foreign debt.

However, it takes a full stretch of the imagination to think that the developed world and the monetary institutions will deliver an altruistic gesture to poor countries. Mauritius is not a member of the Highly Indebted Poor Countries (HIPC), far from it, but our economy is tied to the whim of the West’s creditors. African countries, though, owe a combined total of almost US $ 300 billion, 12% of all external debt by developing countries, according to the New Economics Foundation (NEF).

But the most sinister part is left to debt servicing. In Mauritius, this amounts to Rs 9.6 billion of this year’s budget, a figure representing a quarter of the recurrent expenditure and just over 5% of our Gross Domestic Product (GDP). It also exceeds the total that the country will spend on new projects for this year and more than the health or education budget. But Mauritius has a solid 64th place in the Human Development Index table of 177 countries surveyed by the United Nations Development Programme (UNDP).

On the other hand, countries which do not enjoy the relative wealth of Mauritius find themselves crippled by external debt. In its latest report, Oxfam cites the example of Zambia. This year, debt repayment will cost this nation just over US $377 million or 7.3% of its GDP. About two thirds of this will go directly to the IMF, estimates the aid agency. This is certainly not what Keynes imagined when he proposed the creation of the financial institution after the Second World War.

Instead of correcting trade imbalances and providing relief for countries in economic difficulty, the World Bank-IMF consortium has acted as a corrupt referee. Their policies are totally skewed towards the rich. Its ‘structural adjustments’ of the 90s forced all aid recipients to gear their economies towards free market capitalism. At the time, every country receiving a loan from these agencies had to liberalise its markets accompanied by unflinching privatisations. Although it has changed this policy, the consequences have remained the same. Developing countries can now submit their own poverty reduction strategy, but it must be approved by the donor nation. This is akin to giving them a choice of only one item. If neo-liberalism is not on the menu, they can forget about financial help.

As we now know, trade liberalisation has only helped rich countries increase their economic prosperity. The EU and the US provide massive subsidies to their farmers, who can in turn flood the developing world with products that are cheaper than those locally produced. The cotton and coffee sectors of poor countries have suffered severely from such practices. The West’s dishonesty over free trade has been astonishing. While they impose high tariffs on imports from poor countries, they demand the abolition of taxes on their exports. It is estimated that for every dollar that the World Bank gives to the poor, the West makes three dollars in return.

Again, according to the NEF, the US has so much public debt that it is the poor countries that are financing its repayments. America owes nearly US $ 2.2 trillion compared to the developing world, which has borrowed US $ 2.5 trillion. However, America pays ‘only’ US $ 20 bn compared to the US $ 300 bn that the poor have to fork out. Free market capitalism is the bane of the developing world. It is a policy that drives money from the bottom up. Basically, the poor are financing the rich.

<B>High debt servicing</B>

The privatisation of Mauritius Telecom shows the effects of the neo-liberal doctrine. A highly profitable public enterprise, the sale of 40% of its shares to France Telecom has shown negligible improvements in its affairs. Instead, its expansion has been curtailed. But this is not the only downside to it. On a more pressing level, the transfer of shares to the private sector has meant less revenue for the State. Such capital flight is detrimental to the country’s economy and its development. But, sadly, this economic pogrom applies to the whole of the developing world and sometimes to a rather extreme level.

Mauritius, one of the wealthiest nations in Africa by per capita income, is still paying too much debt servicing, calculates the NEF. But the other countries, like Ethiopia, which is eternally on the brink of famine cannot afford to pay debts. Figures compiled by the World Bank show that this country was still due to pay US $ 73 million in 2003 to this same organization, even though a food crisis loomed and despite benefiting from debt relief.

Although debt cancellation is a prerequisite for the reduction of world poverty, the West and its puppet institutions, the World Bank and IMF continue to impose destructive reforms. At the moment the Millennium Development Goal (MDG) of halving poverty by 2015 is simply unattainable, in the light of research by the World Development Movement. For a continent like Africa, which they have largely impoverished through colonization, proxy wars and mercantile economic programmes, their lethargy is baffling.

They have only shown an inclination for half-hearted palliative treatments rather than a strong will to eradicate destitution. Debt relief and cancellation is not such a radical dogma. Even a senior adviser to Kofi Annan, the UN secretary general, has called on African countries to refuse to pay their debts if relief is not provided. Such an action is what Africa needs, because it will show its determination to tackle its problems instead of always waiting for Occidental money handouts.