To the Minister of Finance
To citizens

We are concerned about the fact that new debts are being taken on in order to make payments ahead of schedule, particularly if these debts involve pension funds. Why are we allocating the money of workers to early payments in favour of the richest countries instead of allocating these resources to education, health care, water or infrastructure?

How are the millions of Peruvians living in poverty and extreme poverty benefitting from this operation? Why do technocrats keep thinking about large figures rather than people? Are they, by any chance, uncapable of taking into account the atmosphere of social protests all over the country?

Why should we prepay debt to the Paris Club? Precisely one of its members, the government of Noruega, decided last year to cancel debts in favour of several countries, including Peru, acknowledging their illegitimate nature and the Belgian Senate has recently launched the initiative to review the debts of Southern countries. By prepaying bilateral debts, we are denying the possibility of future debt writing-off.

Why is there no information regarding the interest rates on new debts undertaken through bond issue by means of which this operation is going to be carried out? What is the sustainability of the growing internal debt as a result of prepayment operations in recent years?

The government underscores the need to obtain “investment grade” ratings for Peru. It is obvious that we as Peruvians cannot possibly be against the advantages resulting thereof. But in order to be a “stable and reliable” country it is necessary, in the first place, to fulfill the internal commitments to the population, thus addressing the bulky social debt.

A final solution to the debt problem involves work at international level and correct management at domestic level. Therefore, external debt management should not be exclusively handled by the Ministry of Economy and Finance but also by the Ministry of Foreign Affairs.

At international level, Peru should work in coordination with the rest of so-called middle-income countries in Latin America, such as Ecuador, Argentina, Brazil, Mexico, among others, to put forward joint proposals in better conditions. Some debt agreements made by the Andean Parliament and the Latin American Parliament should be useful as starting point for this.

At domestic level, the 31st state policy included in the National Agreement, proposing “the rendering of accounts regarding past, present and future indebtedness” should be complied with. Therefore, a public debt audit should be carried out, taking into account the reports prepared by the debt investigation commission set up by Congress, which give an account of major acts of corruption in terms of debt management in the 1990s. Debt audits are tools that can be used to defend the interests of the country and repudiate corrupt debts.

Jubileo Peru and the Peruvian Platform for Human Rights, Democracy and Development aim at furthering the will of the nearly two million Peruvians who signed the petition in favour of the cancellation or substantial reduction of debts owed by Southern countries during the “Life before Debt” campaign in 1999. Therefore, we reject this operation which gives priority to payment of external rather than social debt.

Lima, June 3, 2007.
contacto@jubileoperu.org.pe

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