Business confederation of Mozambique accuses IMF of bad faith in public debt handling

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Business confederation of Mozambique accuses IMF of bad faith in public debt handling

4:33 CAT | 16 Nov 2016

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The president of the CTA, Rogério Manuel, yesterday accused the International Monetary Fund (IMF) of bad faith in the way it is addressing the issue of Mozambique’s public debt.

“If we look at Mozambique’s debt and look then at what many European countries owe, compared to the [natural] resources that Mozambique has as collateral, [these countries] do not come close to Mozambique,” Manuel said to journalists following a meeting in Maputo between the CTA and an IMF delegation.

Manuel said that the IMF is being harsh with Mozambique, despite the country being able to meet its long-term commitments to creditors through income it can generate by exploiting natural resources.

“What is the motive behind all this? I can see interests beyond the strictly commercial interests. After so much conversation with them, I think it is bad faith, I believe it is bad faith,” he added.

Following revelations in April of loans of more than US$1.4 billion to two state-owned enterprises guaranteed by government between 2014 and 2013, in absentia of the Assembly of the Republic and international donors, added to a previous commitment following the same terms concerning the Mozambican Tuna Company (Ematum), the IMF has refused to resume financial aid to Mozambique before an independent audit of the country’s debt is concluded.

On 25 October, the government acknowledged its inability to pay forthcoming instalments of its obligations to creditors, proposing a restructuring of payments and renewed financial assistance from the IMF.

The restructuring request concerned the Ematum debt, already been converted seven months ago into Mozambican sovereign debt securities amounting to US$727 million (EUR 652 million).

Debt restructuring is one of the IMF conditions for the resumption of financial aid to Mozambique, but lenders have already announced that it is premature to start negotiations before the results of an independent international audit of hidden debts are known.

The IMF also requires strong fiscal and monetary adjustment measures to curb both the devaluation of the metical and the increasing inflation and to balance public accounts.

Source: Lusa