Mozambique government told to “re-establish trust” with national institutions

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Mozambique government told to “re-establish trust” with national institutions

8:32 CAT | 27 May 2016

The group of 14 donors and financial agencies which suspended their support to the Mozambican state budget because of the scandal of undisclosed government-guaranteed loans in excess of a million dollars have told the government that, before there can be any resumption of aid, they believe it must first discuss with “national institutions” measures to re-establish trust.

The group, known as the G14 or Programme Aid Partners (PAPs), issued a statement on Thursday recalling that it “informed the Mozambican government of our concern at the implications of the public debt situation on the public finances and the consequent degradation of the country’s macro-economic situation”.

Financial aid was suspended and the PAPs told the government “that currently the necessary conditions are not in place to continue disbursing aid in the form of general budget support”. The group puts the budget support pledged for 2016 at US$265 million, which is about five per cent of public expenditure.

The statement says the PAPs are “undertaking an overall assessment of the impacts of the recently divulged loans and other internal developments in terms of macro-economic stability. management of the public finances and economic governance”.

Other areas, also covered in the Memorandum of Understanding between the G14 and the government, and which are now causing concern, the statement adds, are human rights and “the mobilization of resources aligned with an agenda for poverty reduction and the promotion of inclusive growth”.

The group regarded the recent government statements on the public debt as “a first and important step forwards in matters of transparency”. There have been two major statements – one was the press conference given on 28 April by Prime Minister Carlos Agostinho do Rosario, and the other was last week’s appearance of Finance Minister Adriano Maleiane before the Plan and Budget Commission of the Mozambican parliament, the Assembly of the Republic.

But the G14 insists that more needs to be done, and urged the government “to present and discuss first with the national institutions the measures it intends to carry out to ensure maximum transparency and accountability in order to re-establish trust in the national systems”.

The statement adds that “the Partners have also begun a process of internal reflection on this matter”.

There is no indication of how long such a reflection might take, or when, if ever, general budget support might be resumed.

One move that might be considered as an attempt to re-establish trust is a two day debate in the Assembly of the Republic on the public debt, scheduled for 8-9 June.

The G14 consists of the World Bank, the African Development Bank, the European Commission, the UK, Portugal, Spain, France, Italy, Sweden, Switzerland, Ireland, Austria, Canada and Finland.

Source: AIM