Govt will support international audit of sovereign debt – Mozambique’s FinMin

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Govt will support international audit of sovereign debt – Mozambique’s FinMin

2:54 CAT | 27 Jun 2016

File photo / Minister of Economy and Finance of Mozambique Adriano Maleiane

Mozambique’s Minister of Economy and Finance, Adriano Maleiane, said on Saturday in Maputo that his government would support initiatives for an international audit of the so-called hidden debts incurred by the previous executive.

“The Mozambican government believes in the capacity of national institutions, and that it is now up to these institutions to request such [international audit], which we will support,” Maleiane told reporters on the sidelines of the celebrations of the 41st anniversary of the country’s independence .

Asked about the results of the technical mission of the International Monetary Fund which ended an eight-day visit to Mozambique to assess the impact of hidden debt on Friday, the minister said that the organisation was still collecting data and would then make a final decision.

“They are working to see what the macro-economic impacts are, but this is not yet the decision stage. That’s why they were [meeting] with all sectors, from the private sector to parliament, to establish what is happening,” Maleiane added.

On Friday, the International Monetary Fund advocated an independent international audit of Mozambican companies that received substantial loans backed by the Mozambican government without the national assembly or international financial institutions and donors being informed.

“An international, independent audit of Ematum, Proindicus and MAM would be necessary, the latter two companies having received funding from previously undisclosed loans,” an IMF press release issued on Friday said.

In the same press release, the IMF argued that Mozambique must take urgent and decisive policy measures to prevent further deterioration of the economy, and warned that the country may have reached a dangerous degree of indebtedness.

In particular, the IMF requires substantial tightening at the fiscal and monetary level, exchange rate flexibility to restore macroeconomic sustainability, reducing pressures on inflation and the balance of payments as well as relieving pressure on the foreign exchange market to restore the balance between supply and demand.

The IMF notes that Mozambique has now probably now achieved a high level of risk on debt, with public debt standing at 86 percent of gross domestic product at the end of 2015, including the US$1.4 billion of borrowing by the Mozambican government between 2013 and 2014 not disclosed to parliament or international financial organisations.

Source: Lusa