Mozambique's debt audit should serve to restore confidence in the country - EU
Lusa (File photo) / A view of Maputo
The Mozambican Debt Group (GMD) said on Friday that there were still no guarantees that the Mozambican government would use any eventual loan from the International Monetary Fund with transparency and for the good of the country, and proposed the freezing of any new borrowing.
“We have no guarantee that a loan, which will cost a lot of money to the country, will be used transparently and for the good of the country,” GMD economist and program official Humberto Zaqueu told Lusa.
Defending the fact that the GMD is one of the organisations that signed a letter to the International Monetary Fund requesting the freezing of financial cooperation with Mozambique, Zaqueu said that loans to Mozambique should only be granted after the clarification of the so-called hidden debts worth US$ 1.4 billion.
“If the Mozambican government has already deceived the IMF by contracting illegal hidden debts, why would it not do so again if it receives more loans?” Zaqueu asked.
A freeze on financial aid to Mozambique, he continued, would be a way to pressure the Mozambican authorities into undertaking reforms in the management of public finances, with a view to establishing a transparent framework.
“Unfortunately, the government has historically shown that it only acts transparently if it is under pressure, and this pressure is again necessary,” Zaqueu added.
The IMF suspended financial aid to Mozambique following the discovery in April of last year of loans contracted by public companies and guaranteed by the government between 2013 and 2014, without the knowledge of the parliament or the main State Budget donors.
On Friday, a group of nongovernmental organisations (NGOs) advocated that a set of measures must be taken before the IMF resumes lending to Mozambique, arguing that the country could not be held hostage to unsustainable debt.
“The only sustainable way out of the economic crisis in Mozambique is to apply much greater transparency and accountability in lending, to ensure that any adjustment falls on those who have the capacity to pay, and that Mozambique is not caught in unsustainable debt,” the document, sent to the Executive Director of the International Monetary Fund, Christine Lagarde, reads.
The letter, organised by the British NGO “Campaign for the Jubilee of Debt”, and signed by dozens of Mozambican and international organizations, advocates a “set of measures that must be implemented before the IMF resumes lending to the Government of Mozambique,” and which include, inter alia, an audit and an economic feasibility analysis of public companies Proindicus, Ematum and MAM.
The general objective of the request is that the IMF requires measures to be taken to tackle not only the amount of debt that Mozambique must pay, but also to put in place a set of measures to ensure that a similar situation cannot happen again .
In addition to creating a law that “holds politicians accountable for their actions,” the group also calls for the protection of the underprivileged and a commitment to maintain public spending on social programs, “including education, health, water and sanitation and agriculture”.
Combating corruption through concrete measures, the renegotiation of mega-projects with respect to taxes payable by companies, and the assurance that taxes will not be increased are other proposals of this group, which also proposes a new restructuring of Mozambican debt .
They propose the “cancellation or significant reduction of debt held by the government as a result of the loans to Ematum, Proindicus and MAM”, arguing that “IMF loans should not be used to pay debts to irresponsible creditors, with the risking that Mozambique is caught in a debt trap”.
Lenders, they conclude, need to share the costs of the adjustment motivated by their irresponsible actions and the different economic circumstances that resulted from the fall in the price of raw materials.
The Kroll consultancy was expected to hand over to the government the result of the audit of loans taken out in 2013 and 2014 by Mozambique Asset Management (MAM) and Proindicus, worth US $ 1.4 billion, to which was added more than US$727.5 million from the issuance of sovereign bonds that resulted from the conversion of the corporate bonds issued by the Mozambican Tuna Company (Ematum) on April 28, after an extension of the deadline was granted by the Mozambican Public Prosecutor’s office.
The independent international audit of hidden debts was a requirement of the IMF resuming support for Mozambique following the suspension of its funding in April 2016, which led to a further 14 state budget donors discontinuing payments.Source: Lusa