Committee for the Abolition of Illegitimate Debt

With the Paris Club Paris Club This group of lender States was founded in 1956 and specializes in dealing with non-payment by developing countries.

, you can never be sure that it’s as bad as it looks, but it usually is! This has proved to be the case once again with the consequences of the tsunami.

On 12 January 2005, the 19 richest creditor countries which make up the Paris Club met in Bercy, Paris. They claimed to have decided on a moratorium on debt repayments for those countries affected by the tsunami who requested it. Indonesia, Sri Lanka and the Seychelles were named.

In a press release published on 10 March 2005, the Paris Club gave the terms and conditions of this moratorium. It turns out that the beneficiary countries will have to pay interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. on the arrears! The creditor countries that met at the Paris Club “ propose that the delayed payments should be repaid over 5 years with one year’s grace. The total interest run up during the moratorium in 2005 is to be capitalised and repaid as deferred payments. The interest rate for overdue payments will be decided bilaterally.”

So a country like Indonesia, with over 200,000 dead and missing after the disaster on 26 December 2004, will be financially penalised. It will have to repay in totality the amounts owed in 2005 (around 3 billion dollars), since the Paris Club has only decided on a moratorium; but worse still, it will have to pay extra interest on what is not repaid in 2005.

In January, the Paris Club made a great display of its generosity, claiming to be fully aware of “ the exceptional dimension and devastation of the catastrophe ”. In fact, it was all talk. And to cap it all, the countries that do accept the offer of a moratorium will end up worse off.

The Paris Club’s decision is scandalous, taking advantage of the fact that the tsunami is no longer in the headlines and violating the memory of the dead and missing people.

The Paris Club has not only revealed its cynicism but also its inability to take account of people’s fundamental needs, and its incompetence. Both the Belgian and the French sections of the CADTM demand that the decision should be retracted immediately and a public debate organised on the role of the Paris Club, which takes such unjustifiable decisions behind the backs of the citizens of the countries it purports to represent. We reassert that one of the most urgent measures that needs to be taken is quite simply the straightforward cancellation of the public external debt of the countries affected by the tsunami.