EU: New chair of donor group to Mozambique will keep the same line

Login

Register

http://www.clubofmozambique.com/

EU: New chair of donor group to Mozambique will keep the same line

5:42 CAT | 01 Jul 2016

File photo / Sven von Bursgdorff, European Union ambassador to Mozambique

The EU representative in Mozambique, Sven von Burgsdorff, told Lusa on Thursday that the new chair of the donor group would maintain the same direction as the previous head of the body, Portugal.

“The Portuguese presidency did a tremendous job in the last two months, and we will follow the same line,” von Burgsdorff told Lusa in Lisbon on the eve of the European Union taking over the presidency on July 1st.

“It is very encouraging to see that the partners share the same analysis and agree on an action plan”, which involves waiting for the Mozambique government to explain what it would do regarding hidden debts of more than 1.4 billion dollars it was forced to publicly assume, von Burgsdorff said.

“We are waiting for concrete measures to be proposed by the government, following the International Monetary Fund mission which ended on 24 June,” the German diplomat said.

At issue is a detailed explanation of how three public companies (Ematum, Proindicus and Mozambique Asset Management – MAM) borrowed extensively with government guarantees and with neither Parliament nor the international institutions that support the country, such as the IMF and the donor group, being informed.

The Mozambican government recognized at the end of April the existence of extensive public debt not reported in its public accounts, explaining it as relating to security and strategic infrastructure.

The revelation of loans contracted between 2013 and 2014 and guaranteed by the government led the IMF to suspend the second installment of a loan to Mozambique and the deployment of a mission to Maputo, scheduled for the end of April.

The group of 14 donors to the state budget also suspended payments in May, a move followed by the US, which announced that would review its bilateral support to the country.

In the letter formalizing the suspension, released in mid-May, the G14 described the existence of “hefty debts” with government guarantees but without parliamentary approval as “a violation of the basic principles of partnership”, and thus as not meeting “the necessary conditions for the disbursement of funds through the general budget support”.

The last memorandum of understanding between the Mozambican government and international donors and was signed in September last year. Under the two previous agreements, Mozambique received about four billion dollars (3.5 billion euros at current exchange rates) in general budget support since 2004, equivalent to an annual average of 4 percent of gross domestic product, and 12 percent of total state revenue.

If, however, in addition to general budget support, sectoral contributions from partners are also counted, the proportion of international contributions rises to over 20 percent.

Portugal took over the presidency of the international donor agency from Sweden in June last year, its first presidency, with a projected US$265 million of general budget support and over US$162 million (142 million euros) in sectoral support for the year.

Of the US$265 million planned for this year, donors have disbursed only US$1.2 million, and of the US$162 million of sectoral support, only US$50 million.

Source: Lusa