Frelimo veteran says that hidden debts are sovereign

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Frelimo veteran says that hidden debts are sovereign

8:23 CAT | 28 Apr 2016

Lusa (File photo) / Alberto Chipande

Veteran Frelimo member Alberto Chipande, often considered a mentor to the current head of the Mozambican state, Filipe Nyusi, argued on Tuesday that the debts that were not at first disclosed by the Mozambican government should be considered sovereign, and emphasized the need to find a solution to the problem.

“We have instructed the government to clarify the debt. We concluded that this debt exists, that it is sovereign and that the government must find ways to solve the debt problem,” Chipande said on Tuesday in statements to the press in Beira, capital of Sofala province, central Mozambique.

According to O País, Chipande also said that it is up to the current government to resolve the issue, despite the undisclosed debts having been incurred by the Armando Guebuza executive.

“The government must assume the debts. In fact, the proof is that a top-level government delegation has gone to the US to recognize that there is a debt. We rejected the proposal of some parties to the debt being debated in parliament, because there was no clarity at that time,” Chipande said.

Referring to the recent refusal of the Frelimo (Liberation Front of Mozambique), the ruling party, to debate in the Parliament the issue of debts secretly Alberto Chipande, who is also a deputy, said that the party in power rejected the proposal because it did not want to discuss rumours.

“We did not want to discuss rumours. It is ‘Frelimo that does, Frelimo that says, Frelimo that guides’ (‘Frelimo é que faz. Frelimo é que diz. Frelimo é que orienta’),” said Chipande, who was the first Minister of Defence of Mozambique after the country’s independence in 1975.

On Tuesday, the Mozambican Government recognized the existence of a US$1.4 billion (EUR 1.25 billion) debt not recorded in the public accounts, which it justified on national security grounds.

The spokesman for the Council of Ministers, Mouzinho Saide, confirmed the existence of government guarantees for loans to Proindicus in 2013 worth US$622 million (EUR 553 million) and to the Mozambique Asset Management company the following year. Saíde also confirmed a US$535 million loan (EUR 476 million) involving the Interior Ministry which adds a third credit.

In early April, the Wall Street Journal reported a state-guaranteed loan of US$622 million to the state company Proindicus, contracted in 2013 through the Credit Suisse and Russian VTB bank which was not reported in public accounts.

As a result of these revelations, the IMF cancelled a visit to Mozambique scheduled for the following week, and suspended the disbursement of the second tranche of a loan to the government.

On 19 April, the Financial Times reported that the government of Mozambique had approved another loan of more than US$500 million to another company.

On the same day, the Mozambican prime minister met the director general of the IMF, Christine Lagarde, and, according to a statement from the financial institution, recognized the existence of more than one billion US dollars-worth of external debt of Mozambique that had not been reported.

Many Mozambican organizations have since expressed their indignation about the impact of hidden loans in government debt, demanding explanations from the government and a criminal investigation.

According to a confidential prospectus prepared by the Ministry of Finance of Mozambique and delivered last month to investors in bonds of the Mozambican Tuna company (Ematum), the volume of public debt of Mozambique increased from 42 percent of GDP in 2012 to 73.4 percent in 2015.

Ematum was the first known case of a loan ( US$850 million) guaranteed by the Government in 2013, without being registered in the state accounts. The amount has since entered the public debt of Mozambique and Ematum obligations were exchanged for Mozambican sovereign debt in March.

Source: Lusa