Finance minister urges banks to cut interest rates
Noticias (File photo) / Rogério Zandamela
The restructuring of Mozambique’s US$1.4 billion public debt is “going to happen, no doubt,” because the alternative is to wait five or six years for money from gas, the governor of the country’s central bank said yesterday.
“The negotiations in London are ongoing, and we are fulfilling our obligations to bilateral partners. The problem is the loans that were not disclosed and that we are not able to pay,” Rogério Zandamela said during a debate at the Horasis Global Meeting, which runs until Tuesday in Cascais, Portugal.
“The restructuring [of hidden loans] will undoubtedly happen because the country cannot pay,” the governor said. “Without restructuring, we will have to ask our traditional donors to give us money to pay these loans, and I can tell you that this is not going to happen, they will not give us even a cent to pay these debts.”
The option for lenders of US$1.4 billion in government bonds and government-guaranteed loans to private enterprises, the governor summed up, is clear: “Either they accept a restructuring or wait for five or six years for the gas money to starts to arrive. That’s how it is.”
Rogério Zandamela admitted that last year “Mozambique was the global bad example” in terms of transparency of public accounts, when reports emerged of two loans contracted by Mozambique Asset Management and Proindicus which were neither disclosed to the international partners nor entered into the country’s public accounts.
“The relationship with the international community was stressed last year, the integrity of information was called into question and suddenly nothing could be trusted, and this had consequences,” Zandamela said, noting that the country “paid and continues to pay a huge price”, notably with the cut in international support for development projects to “virtually zero”.
To balance the budget, “we cut on everything except people, but we cannot even pay people who work. There’s tremendous pressure on the budget”, he admitted.
While declining to comment on developments in interest rates and the process of financial system reform, Zandamela was hopeful that the loan audit carried out by the international consultant Kroll and already handed over to the authorities, would “expiate our sins before the world”.
The reforms “are being prepared, the International Monetary Fund will work with us, and I want to say that this is now in the past, and that 2017 and 2018 will be better”, he said.Source: Lusa