Government trying to normalise relations with IMF

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Government trying to normalise relations with IMF

7:12 CAT | 08 Jun 2018

File photo: Info Diário

The Mozambican Minister of Industry and Trade, Ragendra de Sousa, declared on Thursday that the government is doing all it can to normalise relations with the International Monetary Fund (IMF) and with the group of 14 donors who used to provide direct support to the Mozambican state budget.

In April 2016 the IMF suspended its programme with Mozambique when it became clear that the country’s foreign debt was far larger than previously admitted. This was because the previous government, under President Armando Guebuza, had illegally guaranteed loans from European banks (Credit Suisse and VTB of Russia) for over two billion US dollars to three security related companies, Ematum (Mozambique Tuna Company), Proindicus and MAM (Mozambique Asset Management).

When the true scale of what became known as the “hidden debts” was made public, the IMF halted its programme and the donors suspended all disbursements to the state budget. This is the third year of the suspension of budget support which, judging from previous years, has probably cost Mozambique around a billion dollars.

Interviewed by AIM in Lisbon, Ragendra de Sousa insisted “we are doing all in our power to normalise relations with the IMF”, and guaranteed that the Mozambican state “will honour its commitments”.

But the IMF has made it very clear that the basic condition for normalising relations is that the government must explain what happened to the two billion dollars lent to the three companies. An independent audit of the companies was held by Kroll Associates, generally regarded as the world’s foremost forensic auditing company, but Kroll could not complete its job thanks to sabotage by the management of the three companies.

Much of the information requested by the auditors was not forthcoming, sometimes on spurious grounds of “national security”.

Sousa was in Portugal from Monday to Friday on what was billed as a “Road Show on Business and Investment Opportunities in Mozambique”.

Organised by the Portuguese Agency for Investment and Foreign Trade (AICEP), in partnership with the Mozambican Agency for Investment and Export Promotion (APIEX), this “Road Show” was intended to seek opportunities in such areas as agriculture, agribusiness, tourism, mining and manufacturing.

In Lisbon and Oporto, Sousa held meetings with the Portuguese Minister of the Economy, Manuel Caldeira Cabral, and took part in seminars with the Secretary of State for the Internationalisation of Portugal, Eurico Brilhante Dias, and with Portuguese and Mozambican business people.

Sousa described his visit as “fruitful”, but the final decision was up to the companies and institutions contacted. “We in Mozambique are open”, he declared.

He believed that economic development would also prove to be the best way of ending situations of violence such as the current insurgency by islamic fundamentalists in parts of the northern province of Cabo Delgado.

“We have to solve this, not only by the use of force”, said Sousa, “but we must also go to that region with economic programmes, to employ young people and increase production”.

Cabo Delgado, he continued “has gas, but we can’t eat gas. We need companies that promote agriculture, agribusiness and services. The labour is already there”.

“We came to Portugal in order to boost the business fabric in Mozambique, which will solve all these problems”, Sousa said.

Source: AIM