Mozambican government apologizes for undisclosed debts

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Mozambican government apologizes for undisclosed debts

4:20 CAT | 16 May 2016

(File photo) / Minister of Economy and Finance Adriano Maleiane

Minister of Economy and Finance of Mozambique Adriano Maleiane officially apologized to the country for the non-disclosure of government-guaranteed debts incurred between 2013 and 2014, and has reiterated that there will be no consequent tax increases.

“The government, in 2013 and 2014, for reasons it has explained, did not provide information about two guarantees issued in favour of two companies in the value of US$622 million [EUR 550 million] and US$535 million [EUR 473 million] and at this time, is publicly apologizing to the Mozambican people,” Maleiane, quoted by public broadcaster Radio Mozambique, said.

Speaking on the sidelines of the launch of integrated growth projects in the Nacala Development Corridor in Nampula, the finance minister dismissed the possibility of tax increases following the financial crisis triggered by the escalating public debt and suspension of international partners’ support.

“Citizens’ pockets will not be affected by tax increase as a result of these debts,” Maleiane said.

The Mozambican government, Maleiane went on to say, is studying how best to use funds generated by taxes to boost the country’s economy.

“We are reviewing the Customs Tariff to see how we can stimulate agriculture and tourism, which are government priorities,” he said.

The revelation of government-guaranteed loans contracted between 2013 and 2014 led the International Monetary Fund to suspend the second installment of a pre-agreed loan to Mozambique and cancel a visit to Maputo.

The G14 group of state budget donors also suspended its payments, followed by the US, which announced last week that it would review its bilateral support to the country.

In the letter formalizing the suspension, the G14 cited “hefty debts” bearing government guarantees incurred without the approval of parliament, “in violation of the basic principles of partnership”, forcing donors to conclude that the necessary conditions for the disbursement of funds for general budget support are not currently in place”.

The Mozambican president has drawn a comparison between the hidden debts with malaria, saying it was now necessary “to disinfect the house” in order to regain donor confidence.

Mozambique’s partners, according Nyusi, look upon Mozambique as a house unsafe for children “because there are mosquitoes”, but is confident that they will return.

“If we disinfect the house, eradicate the mosquitoes and live a normal life, I believe no donor country, no friend of Mozambique will continue to incriminate us and punish us Mozambicans”, he said.

Source: Lusa