Mozambique's 'hidden' debt restructuring inevitable – Governor Zandamela
Economist Hipólito Hamela says that the Mozambican government cannot pay its debts right now. If an international audit, still ongoing, concludes that “there is a debt not legally contracted”, those “responsible will have to be found”, he says.
There is exactly one month to go before the deadline for Mozambique to pay one of the installments of the state-guaranteed debt contracted in favor of the companies Ematum, Proindicus and Mozambique Asset Management.
Minister of Economy and Finance Adriano Maleiane acknowledged this Monday (February 27) however that it is not yet possible to foresee the outcome of the case. He said the executive is making an “effort” to ensure that by March it will have concluded negotiations with donors on a concrete proposal for bringing Mozambique’s global debt down to sustainable levels.
Renegotiation of debt is possible
In an interview with DW Africa, economist Hipólito Hamela said that, in his opinion, it is still possible to reach an agreement on debt renegotiation so as to adapt it to the timeframe in which the country will start to receive benefits from natural resources exploitation due to start soon.
According to Hamela, given the tight deadlines, the government’s option to “package all the debt, renegotiate it with better terms and conditions and make it sustainable” is “perfectly possible”.
Should the Mozambican government not be able to complete the debt renegotiation or pay the installment due in March, the country will register a second default, after having failed to repay debt interest in January.
For Hamela, the country does not have many more alternatives. “We only have this March window to do this renegotiation and come away ‘clean’. It is never good not to pay, but to come away clean from the point of view of our country’s international image,” he says.
Debt not repayable at present
Hamela says that Mozambique is not in a position to repay its debt at this time and has a dilemma on its hands, given that it “may have money to pay”, but that this “would mean sacrificing many other things”.
“It’s like a father who owes money to the bank. If he pays the debt it’s taking 70 or 80 percent of his salary, which means there’s no food at home. He thinks that he either renegotiates the debt to the bank or else he pays and there is no food in the house. Most probably, a responsible parent will renegotiate with the bank. The bank will have to accept conditions so that the debt can be repaid and the children kept alive,” Hamela explains.
In reaffirming this possibility of debt renegotiation, the economist highlights the fact that, in the short term, gas exploration projects in the Rovuma basin will start and eventually oil projects, with medium to long-term gains in prospect. And only after successfully completing renegotiations can Mozambique reestablish the previous friendly relationship with the World Bank, the IMF and donors.
Find those responsible
International partners have been subjecting the resumption of direct aid to the Mozambican state budget to conditions including the presentation of the conclusions of the international audit into the so-called hidden debts due in March. The total amount owed is US$11 billion.
Hamela says that if the audit concludes that the debt was not legally contracted, it will be necessary to find those responsible and hold them accountable, but not punish them. But “if there was a sovereign guarantee it is because there was a sovereign goal that the government allowed this sovereign guarantee and the responsibility is collective,” he says.
A number of voices are however supporting the individual accountability of those involved.Source: Deutsche Welle
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