More hidden debt in Mozambique?

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More hidden debt in Mozambique?

2:02 CAT | 13 Oct 2016

DW (File photo)

The Mozambican public is surprised and concerned about the alleged discovery of new undeclared debt contracted by the Government.

The news was released last week (October 7) on the ‘Africa Confidential’ website, a London publication specializing in African affairs. The source maintains that, following on from the discovery of state-guaranteed loans taken on by three companies without the knowledge of Parliament and international partners, Mozambicans are again surprised by more hidden debt, valued at $900 million, used to purchase weapons.

The news remains to be confirmed, but would mean that the total amount of unreported debt could rise to about three billion dollars.

Analyst Fernando Lima hopes that the completion of the promised independent audit provides sufficient detail regarding the already known debts and any additional loans.

“Regarding the new amount of $900 million, it seems to me that this amount is not well explained as regards how it was spent and whether this represents an amount additional to the 2.1 billion dollars we already know about,” Lima says.

Wait for the results of the international audit

Alexandre Chiure Maputo Mosambik (DW/L.C.Matias) — Alexandre Chiure

Another analyst, Alexander Chiure, says that he was surprised by the new revelations, because he thought that all information about the so-called hidden debts was already known.

“When this new data appeared, I was thinking that after all it is necessary to dig deeper to see if there is much more. It is data that will be useful to the people performing the international audit. But, to be pointed out in an international publication like this, with some prestige, with some credibility, it is likely to be truthful. Let us give it the benefit of doubt.”

Chiure advocates waiting for the results of the international audit.

An International Monetary Fund (IMF) mission announced at the end of its visit to Mozambique in September that it had made progress in drafting the terms of reference for an international audit of the debts of companies EMATUM, Mozambique Asset Management and Proíndicus.

Negative impact

DW Africa asked Fernando Lima what the impact on the country would be if the new undeclared loan is confirmed.

“The impact will always be negative, because as far as we know (including declarations of the Mozambican government and authorised IMF statements) the talks are moving in the right direction for the relationship with the IMF and the World Bank to be restored, and that the independent international audit will move forward. So the discovery of new debt would disrupt and complicate the process.”

Chiure adds that, if the respective companies prove incapable of servicing their debts, the bill will fall to the citizen.

“It would mean an increase in the amount needing to be paid, and more sacrifice from the public to settle the debt. It would also not be very good for our economy, because we would spend a lot of time paying debts instead of saving for our own benefit.”

The discovery of undeclared debts in last April prompted the IMF and international partners to suspend aid to the country while still pursuing contacts to restore mutual trust.

Source: Deutsche Welle