Luisa Diogo denounces undisclosed debts – Mozambique

Login

Register

http://www.clubofmozambique.com/

Luisa Diogo denounces undisclosed debts – Mozambique

10:34 CAT | 24 Aug 2016

File photo / Luisa Diogo

The undisclosed debts contracted under the previous Mozambican government, headed by President Armando Guebuza, were “not transparent, responsible or serious”, declared former Prime Minister Luisa Diogo on Monday.

She was referring to the hidden government guarantees for loans from Credit Suisse and the Russian bank VTB for the quasi-public companies Proindicus (622 million US dollars) and Mozambique Asset Management (535 million dollars). When the known bond issue of 850 million dollars for the Mozambique Tuna Company (EMATUM) is included, these government guarantees, issued in 2013-14, added two billion dollars to Mozambique’s foreign debt, pushing it to unsustainable levels.

Giving a lecture on the thinking of the country’s first President, Samora Machel, on national economic development to students of Maputo’s Higher School of Accountancy and Management, Diogo was asked what she thought Machel’s attitude would have been towards the “hidden debts”.

According to a report in Tuesday’s issue of the independent newssheet “Mediafax”, she did not directly answer this question, but pointed out that the loans violated the procedures for contracting debts.

This is a matter on which Diogo has a great deal of expertise. Under the governments headed by President Joaquim Chissano in the late 1990s, and the start of this century, she was the key figure in negotiating debt relief, and Mozambique’s membership of the Heavily Indebted Poor Countries (HIPC) initiative. Under HIPC, and the subsequent Multilateral Debt Relief Initiative (MDRI), Mozambique’s debt burden was slashed, bringing the foreign debt down to tolerable levels.

But now, with the EMATUM, Proindicus and MAM loans, the work done by Diogo and her colleagues has been frittered away.

“The process was not transparent, responsible or serious”, she said. “The people who contracted the loans did not take into consideration the consequences that could arise”.

“The management of the public debt was not handled carefully”, Diogo accused, and as a result “the donors are beginning to be very demanding and to control what is done with the money”.

Indeed, when the Proindicus and MAM loans became public knowledge in April, the International Monetary Fund (IMF) suspended its programme with Mozambique, notably the disbursement of a second instalment of a loan from its Standby Credit Facility (SCF). Other partners followed suit, and all the donors and funding agencies that provided direct aid to the Mozambican state budget have suspended disbursements.

IMF Managing Director Christine Lagarde publicly declared that corruption lay behind the undisclosed loans, and the IMF, in addition to major donors such as Britain and the United States, is calling for an international forensic audit of the loans to establish exactly what the money was spent on.

Source: AIM