Mozambique studies debt issuance as a means to pay back arrears worth 12% of GDP
The Standing Commission of the Mozambican parliament, the Assembly of the Republic, on Tuesday rejected claims by the civil society body, the Budget Monitoring Forum (FMO), that the Assembly resolutions approving the General State Accounts (CGE) for 2014 and 2015 are unconstitutional.
These two CGEs mention the government guarantees for the loans in excess of two billion US dollars taken out by the security-related companies Ematum (Mozambique Tuna Company), Proindicus and MAM (Mozambique Asset Management) from the European banks Credit Suisse and VTB of Russia.
The loans were granted in 2013 and 2014, precisely because the government guaranteed them. The guarantees smashed through the ceiling for such guarantees established in the budget laws for those two years, and also violated the article in the Mozambican Constitution which states that only parliament may authorise such debts.
The guarantee for the Ematum loan was included in the 2014 CGE, but went almost unnoticed. But when the 2015 CGE was approved, in April of this year, there was uproar because of the inclusion of the guarantees for the Proindicus and MAM loans. The resolution only passed thanks to the parliamentary majority enjoyed by the ruling Frelimo Party. Both opposition parties, the rebel movement Renamo and the Mozambique Democratic Movement (MDM), voted against.
The FMO then gathered the 2,000 signatures necessary to submit a request to the Constitutional Council, the highest body in matters of constitutional law, that the two resolutions should be declared unconstitutional. The Council asked the Assembly for its reaction and, as expected, the Frelimo majority again prevailed.
The spokesperson for the Standing Commission, Mateus Katupha, told reporters that the Commission believes that the 2014 and 2015 CGEs observed the established procedures for state accounts, and are in accordance with the legislation on the matter. That was the opinion of the Assembly’s working commissions, and the Standing Commission agreed.
“There’s nothing unconstitutional”, he said. “There was a vote on the Standing Commission. The Frelimo parliamentary group voted in favour, and the Renamo and MDM groups voted against”.
Surprisingly, Katupha added that the Constitutional Council has no power to declare the resolutions unconstitutional. The Council can deal with laws, but mere resolutions were not within its remit, he claimed.
For the government, including the guarantees in the two CGEs is a mere administrative matter, and in no way obstructs the independent audit of Ematum, Proindicus and MAM, undertaken by the world’s foremost forensic auditing company, Kroll associates.
But the opposition parties claimed that putting the guarantees into the CGEs was a way of legalising illegal and unconstitutional debts.
Katupha told the reporters that he Assembly will now send the opinions of its commissions to the Constitutional Council.