IMF asks for more information on use of Proindicus, EMATUM and MAM loans

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IMF asks for more information on use of Proindicus, EMATUM and MAM loans

12:20 CAT | 20 Jul 2017

DW (File photo)

The International Monetary Fund (IMF) mission which visited Mozambique from 10 to 19 July has asked for more information on how the more than US$2 trillion of the Proidincus, EMATUM and MAM loans was used, in violation of constitution and budgetary laws, and has left Mozambique without scheduling a date for the resumption of its financial assistance program.

The IMF welcomed the publication of executive summary of Kroll’s audit of the three state-owned enterprises, saying it “provides useful information on how the loans were contracted and on assets purchased by the companies”, but “critical information gaps regarding the use of loans proceeds remain “, a press release received by @Verdade reads.

“The team urged the government to take steps to fill the information gaps and to enhance its action plan to strengthen transparency, improve governance, and ensure accountability,” the statement added.

However, the communiqué does not mention any timeline for the resumption of financial assistance, suspended since April 2016 when the institution discovered that the government had secretly contracted the loans.

The IMF mission, headed by Michel Lazare, examined other recent developments in the Mozambican economy, approving the end of the wheat and fuel subsidy but noting that “increasing wage and salary spending continues to put pressure on the budget”.

“The team emphasized that a strong commitment to fiscal adjustment is an essential element of ensuring policy sustainability, fostering a decline in inflation and interest rates, limiting further increases in public debt, while at the same time facilitating debt restructuring,” the communiqué reads.

“The team stressed that the 2018 budget should decisively reduce the fiscal deficit. It should focus on eliminating tax exemptions (including for VAT), containing the expansion of the wage bill, and prioritising only the most critical public investments while avoiding further accumulation of arrears,” reads the IMF statement.