Africa

Shattered Rwanda vows to repay billion dollar debt

Jean-Baptiste Kayigamba
Mail & Guardian
November 17, 1997

RWANDA’S economy has been shattered by years of ethnic conflict, but it has vowed to repay all foreign debts incurred by previous regimes even if the money was used to repress Rwandans.

”Rwanda is committed to clearing up all its debts,” Minister of Finance and Economic Planning Donat Kaberuka told journalists here recently. He said the debts, estimated at one billion U.S. dollars, were contracted during the regime of late president Juvenal Habyarimana.

Habyarimana, who borrowed heavily to finance the war in his country, died when the plane in which he was travelling crashed near the Kigali international airport in April 1994. His death sparked a three-month orgy of bloodletting in which up to one million people were slaughtered.

Kaberuka said the government had appealed to the World Bank and the International Monetary Fund (IMF) to write off some of the country’s outstanding debts so as to reduce its burden.

He urged them to classify Rwanda as a ”Heavily Indebted Poor Country” (HIPC) so as to enable it to qualify for debt reduction.

The HIPC scheme, an IMF/World Bank initiative that came into force last year, is aimed at enabling poor countries whose policies satisfy the two institutions to concentrate on sustainable development and poverty reduction by ridding them of unsustainable debts.

Kaberuka said Rwanda had qualified for debt relief, but that the process would take at least three years.

Some experts here have urged the government not to pay up. ”Paying these debts is unfair,” said an economist here. ”Rwanda will simply be reimbursing the money used by the genocidal regime to purchase weapons that were used during the 1994 holocaust.”

The minister disagreed. ”Those debts were signed by a sovereign government and they are sovereign debt,” the New Times weekly here quoted Kaberuka as saying recently. ”The current government that replaced the defunct sovereign government has to pay debts left behind.”

The debt began mounting after Rwanda and the IMF signed an agreement on a structural adjustment programme (SAP) in 1990, soon after the Rwandese Patriotic Front (RPF) invaded the tiny Central African country from neighbouring Uganda.

However, the continued insecurity and economic setbacks that resulted from the war hampered the implementation of the agreement, whose provisions included a 40-percent devaluation of the Rwandan franc and the introduction of a more liberal system of import licensing.

As the war escalated, the beleaguered Habyarimana regime resorted to diverting balance-of-payment aid that had been allocated by donors for commodity imports. Some of the money was used to buy weapons from countries like Bulgaria, Albania, Egypt and South Africa to fight the RPF.

As military pressure mounted, Habyarimana also borrowed a total of 250 million dollars from the central bank, the Rwanda Development Bank, the Social Security Fund and the National Insurance Company to keep his grip on power.

When he died, an interim regime took over but in three months it was ousted by the RPF.

The RPF government recently signed a protocol with local banks and other financial institutions to repay money owed to them. Under the accord, the government pledged to clear the backlog of domestic debts within 15 years, starting January 1998.

”The government will allocate 3.3 million dollars through treasury bonds, every annual budget to repay the debts,” said Kaberuka.

Some international organisations like the European North-South Forum have also urged the World Bank and the IMF to write off Rwanda’s debts since they were used to ruin the country and destroy lives.

The two institutions are not expected to respond soon. Until they do, the government will have no choice but to continue to repay a foreign debt equivalent to 85 percent of Rwanda’s gross domestic product. — IPS/Misa, November 17, 1997.

Categories: Africa, Odious Debts, Rwanda

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