Mozambique: Government must say whether it intends to pay ‘hidden debt’ – NGOs

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Mozambique: Government must say whether it intends to pay ‘hidden debt’ – NGOs

2:28 CAT | 01 Mar 2018

Mozambique’s government should publicly declare whether it intends to pay the massive ‘hidden debt’ whose discovery prompted international donors to suspend aid to the country, before it presents to creditors its proposal for restructuring them, four civil society organisations said in a joint statement on Tuesday.

The government last week said that it planned to present such a restructuring proposal in London on 20 March.
The debt in question totals some $2.4 billion (€1.9 billion) in loans taken out by three public companies and secretly guaranteed by the previous government in 2013 and 2014. Although the companies were created to operate in the fisheries and security sectors, it is not clear how the money borrowed was used.

In a statement released on Tuesday, the Public Integrity Centre (CIP), the Mechanism of Support to Civil Society Foundation (MASC), the Institute of Social and Economic Studies (IESE) and the Observatory of the Countryside (OMR) said that the government should first explain to the country whether, in making this proposal to restructure the debt, it intends to commit to paying it off.

The hidden debt, the non-government organisations note, were declared illegal by a parliamentary committee of inquiry and by the Administrative Tribunal, in various reports.

“The government should inform Mozambicans, before telling creditors, if it intends to pay illegal and illegitimate debts” the NGOs say.

They also call for the attorney-general to take concrete measures against the people involved in illegally taking out and managing the debt, to avoid their interfering in the investigation that is underway, and stress that the state should work to recover assets that have been siphoned off before they are totally dispersed and impossible to recover.

The NGOs recall that an international audit on the hidden debts concluded that there were also misdeeds on the part of the banks involved, Credit Suisse of Switzerland and VTB of Russia. They note that about one quarter of the total value of the debts, about $500 million, was used for unknown purposes and that about one third of the total, around $713 million, may have been diverted through underbilling for goods bought by the companies.

Source: Lusa