Economists question the “moral authority ” of the central bank – Mozambique

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Economists question the “moral authority ” of the central bank – Mozambique

3:29 CAT | 16 Jun 2020

File photo: Lusa

Two economists have today questioned the “moral authority” of the Bank of Mozambique (BM) as the regulator of the national financial system, on the grounds of it not having yet presented its 2018 or 2019 accounts.

“Unfortunately, as has been said repeatedly, the BM is a repeat offender in terms of opacity and lack of transparency,” João Mosca said to Lusa, after the topic returned to the public debate recently.

In a letter to the International Monetary Fund (IMF) in April, the Minister of Economy and Finance, Adriano Maleiane, and the governor of the BM, Rogério Zandamela, promised to publish the accounts, in the context of arguments for financial support vis-à-vis Covid-19.

“We will implement the recommendations of the central bank’s safeguards assessment shortly. In the latter context, the Bank of Mozambique will publish the audited financial statements for 2018 shortly after completion and will, from now on, publish audited financial statements in due time,” the document pledges.

On June 2, the Council of Ministers rejected a proposal to revise the Law on Financial Institutions reinforcing the BM’s powers to appoint its own governing bodies, a government source told Lusa.

Economist João Mosca considers the executive’s refusal to strengthen the central bank’s powers to be “right”, because “it would be a mistake in a context of lack of transparency”.

Given the fact that the Mozambican financial regulator has not yet presented the results of its own performance, Mosca considers that it has no “moral authority” to oversee the Mozambican financial system, accusing the institution of being guided by “opacity”.

The Bank of Mozambique, Mosca continues, suffers from “serious problems of corporate governance”, which translate into a misalignment between its performance and the government’s economic and financial policy.

“This lack of transparency is also seen in the lack of a healthy environment in its relationship with commercial banks and in the regulator’s authoritarian stance,” he added.

Agostinho Machava, an economist and researcher at the Centre for Democracy and Development (CDD), said lack of clarity concerning the BM’s financial and equity situation created a climate of suspicion and discredit in relation to the regulator.

“If the regulator is not transparent, how can it supervise and demand transparency from other institutions?” Machava asks.

Machava cites the BM’s decision to sell to its own pension fund Moza Banco as an example of the central bank’s dubious performance.

“We had the regulator selling to itself a commercial bank that it had intervened in, and that is clearly an example of lack of transparency,” he says.

In the BM’s 2017 annual report, released in September 2018, the consultancy KPMG classified the central bank’s accounts for the financial year 2017 with an “adverse opinion”, a position that could discredit the regulator, economists said at the time.

The report by KPMG’s independent auditors stated that the 2017 documents “do not truly and properly present the financial position” of the Mozambican regulator, as it did not consolidate “the financial statements of Kuhanha”, the pension fund company which the BN controls, “and its subsidiary acquired during the year 2017”, that is, Moza Banco.

Despite several attempts, Lusa was unable to obtain clarification from the Bank of Mozambique.

Source: Lusa