Mozambique Administrative Tribunal says Government continued to violate debt rules in 2018

Login

Register

http://www.clubofmozambique.com/

Mozambique Administrative Tribunal says Government continued to violate debt rules in 2018

4:13 CAT | 14 May 2020

Administrativetribunal.samora.statue.maputo.not_-770x510

File photo: Lusa

Mozambique’s Administrative Court (TA) says it believes the Government continued to disregard debt contracting rules in 2018.

“In the debt sustainability indicators, namely that on the external debt vs. gross domestic product (GDP) and of external debt vs. exports, the respective ratios [69.5% and 190.5%, respectively] remain above the established limits, which means that that the country is considered to be at high risk of indebtedness and, consequently, subject to restrictions in the contracting of new credit,” the TA says.

The way in which the executive borrows is analysed in the TA’s opinion on the General State Account (CGE) of 2018, scheduled for debate and vote by the Assembly of the Republic (AR) yesterday and today.

The TA, which also takes on the role of the Court of Auditors, makes other warnings, too. It points out as one example violation of the law, the government’s assumption of the debt of company PMS (Plataforma Multiserviços), without the same having executed a project that had been granted to it.

The debt was also contracted without a prior assessment of the feasibility of the project by the beneficiary company.

Another case cited shows a lack of properly elaborated economic and financial reports of state companies, as well as of reports of operational performance.

The TA also highlights the non-compliance with the legal requirement to place 30% of government bonds on the Mozambican Stock Exchange (BVM), with a view to broadening the population’s access to government bonds.

State managers who violate public debt contracting rules “must be held accountable”, the TA says.

In its opinion on the 2018 CGE, the TA also warns of the prevalence of deficiencies in the organisation of the portfolios of the State’s expenditure justifications, execution of ineligible expenses and incorrect classification of expenses.

There is also a lack of proof of receipt of purchased goods and of reports or opinions of independent inspectors in the accounts of civil construction works.

The TA also notes that there is no record in the 2018 CGE of the execution of some external financing projects, which were carried out outside the Single Treasury Account (CUT), and criticises the state for paying expenses from previous years, without the amounts having been included in the “ended years or unpaid expenses” funds.

The opinion also notes that contracts for personnel, supply of goods, provision of services and consultancy were signed in violation of legally established rules and procedures.

Regarding revenue, TA notes that the 2018 State General Account’s forecast of its own revenues was deficient, and lacked budget forecasts of the amounts collected in the items ‘disposal of assets’ and ‘own revenues’.

Mozambique’s public debt has been under close scrutiny both inside and outside the country since, in 2016, loans with sovereign guarantees in the amount of US$2.2 billion (about two billion Euros) were validated by the previous administration.

The money was mobilised to finance three state-owned fishing and maritime security companies, but both Mozambican and US courts are attempting to bring cases to trial on charges that part of the money was used to pay bribes, among other illicit purposes.

Mozambique and the United States have opened cases against some of the players involved in the contracting of the loans.

Source: Lusa