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Moody’s rating agency said yesterday that the holding of an international audit of public accounts could pave the way for the country to start receiving international aid again.
“The transparency of an independent and credible auditing of public companies Mozambican Tuna Company (Ematum), Mozambique Asset Management (MAM) and Proindicus using the parameters that the IMF and Mozambique agreed on, even if it were to present negative findings, it would begin to restore the country’s position among International donors,” Moody’s writes.
Moody’s analysts say the statements of IMF African Department Director Abebe Aemro Selassie underline that carrying out an external audit is “an essential prerequisite to the continuation of financial aid” to the country.
Experts from the rating agency, which classifies Mozambique sovereign debt as ‘Caa3 with negative evolution’ or ‘junk’ status, say: “The resumption of financial aid flows would be positive from a credit assessment point of view and necessary given the substantial fiscal pressures that the government faces.”
The research note, which does not constitute a rating action, says that external funds “could increase the budget of Mozambique and the foreign exchange reserves of the Bank of Mozambique, and the audit could itself increase the transparency of the [budget] dangers that the government faces”.
The IMF, the World Bank and the UK Department for International Development suspended aid to Mozambique in April this year, following the disclosure of hidden debts worth over US$1.4 billion. According to Moody’s calculations, the cut in aid represents a fall in funding of 2 to 3 percent of GDP.
Mozambique’s total international financial aid in 2015 was approximately 10 percent of GDP. Moody’s says that the budget deficit will reach 6.4 percent of GDP this year. External currency reserves had fallen by 18 percent in May over the same period and the metical was one of the steepest-falling currencies of the year, losing 42 percent of its value against the dollar.Source: Lusa