Confusion and spin over IMF and secret debt – Hanlon

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Confusion and spin over IMF and secret debt – Hanlon

6:56 CAT | 25 Jan 2017

A Washington IMF press conference which used Mozambique as a bad example has in turn been used incorrectly to stay that the IMF claims there is – and is not – additional hidden debt, when the IMF is making no statement on the subject at all.

At an IMF press briefing on 12 January, Sean Nolan, deputy director of the IMF’s Strategy, Policy and Review Department, said: “there’s not a broad-based drift toward debt distress [in] the low-income world, but there are a number of high-profile examples where things have gone wrong. Examples are: Mozambique is a good example, where there’s a lot of undisclosed loans that suddenly materialize out of nowhere. They’ve been undertaken by state enterprises.” http://www.imf.org/en/News/Articles/2017/01/13/TR011216-International-Monetary-Fund-Press-Briefing

Correio da Manha and Magazine Independente both interpreted this to mean that the IMF accused Mozambique of concealing further “undisclosed debts”. The IMF in Maputo then issued an unusually strong statement: “The International Monetary Fund (IMF) categorically denies the allegations made on January 18, 2017 by the newspaper Correio da Manha, and reproduced by Magazine Independente.” It continued: “while Mr. Nolan confirmed that the previously hidden debt contributed to a worsening of the debt situation in Mozambique, he did not state, contrary to allegations, that undisclosed debts still exist”. Which has been taken to mean that the IMF says there are no further undisclosed debts – which is also not true.

Africa Confidential, which has been well informed on the debt crisis, argued that there are further loans to be exposed by the Kroll audit of the three companies involved in the secret debt. But, confusingly, this may not involve new money. It may be that the companies lent on some of the money they had borrowed, or used that money to guarantee debts. Meanwhile, accounting and auditing of state companies has been so poor that there may be state guarantees of loans which have not been revealed. These could be perfectly reasonable guarantees for purchases or construction which were never properly listed.

By Joseph Hanlon

Source: News reports & clippings