Source:
CCADE
Mon Jul 30 2007
The Citizen Commission on Public External and Internal Debt Auditing (CCADE, in Spanish) was created in Uruguay for the purpose of promoting the participation of informed and responsible citizens in an issue of huge significance for the country; analizing the legitimacy of debt and the corruption surrounding indebtedness; investigating whether the borrowed funds were invested or not and into which; studying the amounts already paid by way of interests, etc. The Commission is made up of civil society organizations and independent citizens.
The Commission recently launched the publication of an electronic newsletter in which different topics of interest will be dealt with. The following article is part of issue Nº1 (April/May 2007).
Why do we propose an audit?
Hand in hand with the IMF’s loss of credibility at international level – owing to its ruinous advice that prompted economic crises in several countries – various movements demanding debt audits have been set up in the North and in the South. Both in creditor and debtor countries, citizens wonder how come the current debt levels were reached, which policies and mechanisms were/still are reponsible for the ongoing increase in public debts, payment difficulties and economic constraints imposed by governments in order to comply with said payment obligations.
In Uruguay, the group of citizens making up the CCADE ask ourselves exactly the same. Notwithstanding the fact that our country has always been known for being a good payer, the debt keeps growing. It has already reached the amount of $13.7 billion (data from the Central Bank of Uruguay as at December 2006).
But, is that too much?
To have an idea, within the operating expenses included in the budgeting process implemented in 2005 (according to figures from the National Accounting Office), State Financial Disbursements (resources allocated to payment of interests and other debt-related costs) accounted for 21.70 per cent of the national budget, that is to say, one-fifth of it. As usual, in order to understand whether this is too much we have to compare it with the percentage allocated in the same period to Public Health Care (5.93 per cent), Public Education (11.14 per cent), State University (2.81 per cent), only to mention some items that make up the national budget.
Meanwhile, state investments during the same period amounted to 6.31 per cent. At this stage, we can certainly state that it is indeed too much.
Where are they?
But, we also wonder: where are those $13.7 billion? The country underwent a notorious deterioration: loss of purchasing power, unemployment, increased poverty… What was that money used for? How come is it possible that we become indebted but fail to progress in terms of development, employment, health care, education and well-being for our people?
What are we paying for?
Some suspicions arise and are fed by audit reports that have been carried out by the government in office in Ministries, the State Mortgage Bank (BHU), the state-owned water utility (OSE), the Bank of the Republic (BROU), Customs... These reports evidence the fact that public money, i.e. our money, has been in the best of cases mismanaged, in other cases used to foster the clientelistic practices that characterized former administrations, as is the case of loans granted by the Bank of the Republic to friends and “party colleagues”, private banking bail-outs, bribes and a long list of abuses and misuse of power that we, Uruguayans, are well acquainted with. In addition, we should take into account the period of military dictatorship during which the country’s public debt was increased five-fold. So, how is it possible not to think that cases of mismanagement, corruption, lack of transparency and power abuse may not have also contaminated debt negotiations? What if we are paying the trip to a luxury clinic of some of our public officers? What if we are paying for the weapons that were used to repress and torture Uruguayan people during the dictatorship?
Were creditors not aware of the fact that they were lending to an illegitimate government? (See Parliamentarians’ Declaration on shared responsibility). The only way to find the answer is to audit loans.
Who audits?
The government is the only one that gathers all the possibilities to carry out a proper audit. But citizens have the right to ask for loan contracts in order to analyze them, request information from public institutions and verify whether the goals sought when requesting the loan were met or not. This kind of citizen audits have been carried out in countries like Brazil, Peru, Ecuador and Argentina and, through different channels, they have succeeded in making governments audit certain loan cases that citizens had pointed out as illegal or fraudulent (in future newsletters we will be publishing those investigations).
In the event of proving corruption cases, certain haircuts, compensations and reparations can be proposed or else there is the case of the government of Norway, which agreed to cancel the debts owed by five countries in view of the fact that they had legal faults, thus acknowledging its responsibility in the origin of such debts and the damages caused to those countries that had to pay back what they owed and much more.
To sum up, debt auditing should help:
- To understand how the country has reached current debt levels.
- To create mechanisms aimed at promoting transparency in negotiations and launching an active surveillance and control campaign by civil society and its representatives, i.e. parliamentarians.
- To create proposals, with the support of social organizations and movements, aimed at the reduction of existing debts and a better management of new debts.
- To carry out actions at international level aimed at having incidence on the decision-making of creditor countries and multilateral and private financial institutions, in favour of solutions that would also take into account the social debt contracted with affected populations. And because of the fact that the right to information is a fundamental right, above all when it comes to public funds.
Related Information:
* Ecuador sets up an external debt audit commission, by IFIs Latin American Monitor
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