IMF to visit Mozambique to discuss debt audit concerns
The Economist Intelligence Unit (EIU) on Friday says that the Mozambican government would probably only authorise disclosure of the full Kroll report into the country’s ‘hidden’ public debt at the end of the ruling Frelimo congress in September.
“The publication of a full and detailed version of the report, saying who benefited from the loans, would have comprehensive political implications, given that top party members including perhaps the president, Filipe Nyusi, risk being implicated in irregularities,” the experts of the unit of economic analysis of the British magazine The Economist say.
In an analysis of the International Monetary Fund’s visit to Mozambique, which ended on April 20, and to which Lusa has had access, the Economist analysts write: “We think it is unlikely that the government will yield to IMF requests before the Frelimo congress in September when Nyusi’s role as party leader could be at stake.”
The EIU considers the IMF to be “taking a hard line with Mozambique” following a disclosure of a summary of Kroll’s audit report on debt contracted by two public companies worth US$1.4 billion without anyone being informed nor the amount recorded in the public accounts.
After suspending financial aid in April last year, the IMF forced an independent forensic audit of the loans, but the auditors complained about lack of information and the IMF concluded that “information gaps remain”.
Mozambique, the Economist analysts say, “needs the IMF because the balance of payments position is fragile and because other donors and creditors will not resume relations with Mozambique until an IMF program is agreed upon”.
After the Frelimo congress, with Nyusi likely to remain in power, “scapegoats are likely to be found, but it is not guaranteed that the IMF will accept less than full accountability of the responsible authorities”.
Beyond this political question, there is the issue of public accounts themselves. “Making relations difficult, the IMF was also unimpressed with the direction of policies,” the EIU writes, highlighting the “urgent need to consolidate public finances” advocated by the Fund.
The EIU therefore concluded that “[although the Government has launched] some initiatives to reduce subsidies, persistently high public expenditure on public sector wages and the use of local loans are not a sustainable fiscal policy”.
In a communiqué released at the end of its visit to the country, the Fund warned that Mozambique urgently needed to consolidate public finances, noting that, despite the improvement of some indicators, the country faced difficult economic prospects, and called on the government to take measures to fill in “gaps in essential information” regarding how the money from hidden debts was used.Source: Lusa