Audit of Mozambique’s undisclosed loans will be public, says IMF

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Audit of Mozambique’s undisclosed loans will be public, says IMF

7:34 CAT | 11 Oct 2016

IMF / Abebe Selassie speaks to the press in Washington on Saturday, 8 October 206

The International Monetary Fund (IMF) has promised that the independent audit into the loans for over two billion dollars, guaranteed by the previous Mozambican government under President Armando Guebuza, will be made public.

At a press briefing in Washington on Saturday, the new head of the IMF Africa Department, Abebe Selassie, said there had been positive results from the late September IMF mission to Maputo which discussed the terms of reference for the audit.

“There’s a good agreement between the government and the IMF on some of the key prerequisites for the audit”, said Selassie. “That is, that there will be an independent audit undertaken of the loans that have been taken up by state owned enterprises, and that this audit will be made public. It will be published. So I think this is a very good understanding. We are going to wait to see how that evolves in the coming months”.

A skeptical reporter asked Selassie what the IMF was doing to ensure that it was not “hoodwinked” by the Mozambican government.

“This debt issue didn’t really hoodwink the IMF”, he replied. “It hoodwinked the people of Mozambique, so it’s not about us”.

The problem was that the macro-economic data provided by the government was misleading, since it omitted over a billion dollars worth of government-guaranteed loans.

“We can only work with the data that’s provided to us, and we provide advice on the basis of that”, said Selassie. “So transparency in fiscal account, transparency in public policy making is first and foremost important for the people of the countries whom the governments represent”.

The three companies subject to the audit are the Mozambique Tuna Company (EMATUM), and the security linked concerns Proindicus and MAM (Mozambique Asset Management). All these companies received loans from European banks (mostly Credit Suisse and VTB of Russia), which were guaranteed by the government in violation of the clauses on guarantees in the 2013 and 2014 budget laws.

Since the EMATUM loan (for 850 million US dollars) took the form of issuing bonds on the European bond market, it became public knowledge in 2013. But the loans to Proindicus (622 million dollars) and to MAM (535 million dollars) were not disclosed, either to the Mozambican public or to the country’s international partners, including the IMF.

When the loans were made public, thanks to articles in the press in April this year, the IMF suspended its programme with Mozambique, including the second instalment of a 283 million dollar loan under the Fund’s Standby Credit Facility (SCF). Other partners soon followed suit, including all 14 donors and funding agencies that used to provide direct support to the Mozambican state budget. All further disbursements were suspended.

The IMF has repeatedly made it clear that an international, independent audit of EMATUM, Proindicus and MAM is the basic pre-condition for the normalization of relations between the Fund and Mozambique.

Source: AIM