Mozambique admitting unreported debt an “important step” – IMF

Login

Register

http://www.clubofmozambique.com/

Mozambique admitting unreported debt an “important step” – IMF

1:25 CAT | 21 Apr 2016

Managing Director of the International Monetary Fund (IMF) Christine Lagarde attends a news conference after a meeting of leaders of economic and financial institutions, at the Chancellery in Berlin March 11, 2015. REUTERS/Stefanie Loos/Files

Reuters / Managing Director of the International Monetary Fund (IMF) Christine Lagarde attends a news conference after a meeting of leaders of economic and financial institutions, at the Chancellery in Berlin March 11, 2015.

Mozambican Prime Minister Carlos Agostinho do Rosario met IMF director general Christine Lagarde on Tuesday in Washington and acknowledged that the IMF had not been informed of more than US$1 billion dollars of external debt.

An IMF statement released after the meeting read: “The Prime Minister of Mozambique recognized that an amount exceeding one billion dollars of its foreign debt secured by the Government had not been previously disclosed to the Fund.”

According to the Fund, the disclosure of such information by the Mozambican authorities is an “important first step”.

Mozambique will provide more information and supporting documentation over the next few days so that the two bodies can “establish the facts and allow the Fund to make a full assessment,” the IMF said.

“The Fund and Mozambique will work together constructively to assess the macroeconomic implications of this information and identify steps to restore confidence,” the press statement sent reads.

The IMF has cancelled the payment of the second tranche, amounting to US$155 million loan that was agreed at the end of last year with Mozambique, totalling US$285 million.

According to the Financial Times, citing an internal source of the IMF, the decision was taken following the cancellation of an IMF visit Mozambique this week, during which it was expected that the Fund would authorize the payment of the second part of a loan agreed at the end of last year.

“It’s probably one of the worst cases of wrong data delivery by a government that the IMF has seen in an African country in recent times. They deliberately hid from us at least a billion dollars, possibly more, in hidden loans”, the Financial Times’ IMF source said.

“Mozambique is on the verge of a financial crisis, if the authorities do not take measures to deal with current risks”, the same source said, adding that international donors, who finance about 25 percent of the state budget, might also follow the same course and cancel payments of US$350 to US$400 million.

“Then Mozambique would face both a fiscal and a balance of payments crisis.”

Source: Lusa