Mozambican organizations demand accountability of banks involved in hidden debts

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Mozambican organizations demand accountability of banks involved in hidden debts

4:45 CAT | 04 Jul 2016

File photo / A view of Maputo

Mozambican civil society organisations today called on the international community to hold foreign banks involved in the so-called hidden debts incurred by the Mozambique government between 2013 and 2014 accountable for their actions.

“The international community should initiate concrete processes and actions to demand accountability of international banks that were clearly involved in illegal activities,” reads a joint press note issued by the Centre for Public Integrity (CIP), the Civil Society Support Mechanism (MASC), the Institute of Social and Economic Studies (IESE) and the Observatory of Rural Areas.

Inaction by the international community, continues the note, will cast doubt on the effectiveness of international financial system monitoring and control mechanisms.

The four organisations criticise the Mozambican government for not making a serious commitment to identifying and holding responsible the authors of the borrowings in the previous executive.

“Merely admitting the violation as an alternative to actually sanctioning the illegal act will deliver an irreparable blow to our aspiration to effective and credible governance,” the press release states.

The four organizations accuse the Mozambican authorities of adopting an approach that “glosses over the culpability” of the loans’ instigators and does not present a credible plan to restore society and the international community’s trust in the government.

“The dragging-on of this obscure, opaque situation worries the civil society organizations involved in the research and monitoring of governance,” said the press release.

Mozambican civil society, the statement said, doubts that good governance can obtain in Mozambique while such efforts as are being made by the government fail to be translated into concrete action to restore trust in public institutions.

The International Monetary Fund (IMF) and donors to this year’s state budget suspended their support after the revelation of the existence of US$1.4 billion (EUR1.2 billion euros) in loans guaranteed by the Government to state companies which were not declared in the public accounts.

With the revelation of the new loans, public debt of Mozambique is now set at US$11.66 billion (EUR10.4 billion ), of which US$9890 million (EUR8.9 billion) are foreign debt.

This represents over 70 percent of Gross Domestic Product (GDP) and reflects a debt climbing since 2012, when it was fixed at 42 percent.

At the end of the visit of an IMF mission to Maputo, on Friday, the institution said that Mozambique faces difficult economic challenges and that it is expected that economic growth in 2016 reduces to 4.5 percent, against 6.6 percent in 2015, almost 3.3 percentage points below historical levels, with a substantial risk of lowering in this projection.

Source: Lusa