GMD says Mozambique needs to restore international confidence quickly

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GMD says Mozambique needs to restore international confidence quickly

12:30 CAT | 06 Jul 2017

The Mozambican Debt Group (GMD) yesterday said that the country needed to recover the confidence of the international community quickly in order to resume the economic and social development of years past.

“Without recovering the confidence of [international] partners as soon as possible, it will be very difficult to continue on the path the country has taken in recent years,” Humberto Zaqueu, an economist and GMD program official, told a press conference.

According to Zaqueu, the escalation of Mozambique’s public debt, exacerbated by loans secretly guaranteed by the government, has led the country to backtrack on progress made in recent years.

“For just over a decade, the country was an example in terms of economic growth and socio-economic development, but now we are regressing for reasons as peripheral as these [hidden debts],” he said.

If a solution to the current debt level is not achieved, Zaqueu continued, Mozambique would find its service charges skyrocketing as hidden debt securities fell into the hands of “vulture funds”.

“The vulture funds have their price; their business model is based on fines and court costs,” he said.

Zaqueu pointed out that the spiral of Mozambique’s public debt could jeopardize the resources of the Mozambican state and the future of generations to come. Mozambique saw its debt surpass US$11 billion after the discovery in April 2016 of debts secretly endorsed by the previous Mozambican government between 2013 and 2014.

The discovery of the ‘hidden debts’ led the International Monetary Fund (IMF) and donors to suspend aid to the country, subjecting the resumption of support to the conduct of an international audit of public debt.

On 24 April, Mozambique’s Attorney General’s Office published the summary of the audit report, noting that it had failed to clarify the fate of the US$2 billion borrowed by the three state-owned companies between 2013 and 2014.

“Gaps remain in the understanding of how exactly US$2 billion was spent, despite considerable efforts” to clarify the matter, according to the PGR in a statement on the investigation by the international consultancy Kroll.

Source: Lusa