Mozambique: Government paid a part of Nacala airport debt to BNDES

Login

Register

http://www.clubofmozambique.com/

Mozambique: Government paid a part of Nacala airport debt to BNDES

12:01 CAT | 26 Jun 2020

Photo: O País

The Mozambican Government made a US$52 million payment to Brazil, in 2019, relating to the US$125 million loan for the construction of the controversial Nacala International Airport in Nampula.

Inaugurated in December 2014, Nacala International Airport, in the northern province of Nampula, was built on the basis of a US$125 loan from Brazil’s National Bank for Economic and Social Development (BNDES).

Under a guarantee provided by the Mozambican state, the money was transferred to the public company Aeroportos de Moçambique, which for several years failed to pay debt instalments, the Nacala project having become a “white elephant”.

Meanwhile, ‘O País Económico’ has learned from the Ministry of Economy and Finance (MEF), Filipe Nyusi’s government paid a sum of US$52 million in 2019 after the guarantee was activated, leaving US$73 million still owing.

Nacala International Airport entered the Brazilian justice system’s “black list” in the course of the country’s “Car Wash” [“Lava Jato”] anti-corruption investigation, which covered, among other transactions, illicit payments by Brazilian construction company Odebrecht to the Mozambican authorities between 2011 and 2014 – period of construction of the airport.

During the trial, one of the Odebrecht whistle-blowers, António de Castro Almeida, said that an employee of the Foreign Trade Chamber of the Brazilian presidency (CAMEX ) received 0.1% of the contract value to expedite the project’s approval at the agency ( one of the necessary steps to release the financing at BNDES).

Nacala International Airport was designed to handle 500,000 passengers and 5,000 tons of cargo per year. However, the reality on the ground has proven very different.

External debt overdue

Mozambique’s stock of overdue foreign public debt repayments stood at about US$295.3 million at the end of last year. This amount included overdue payments to five bilateral creditors (Libya, Iraq, Angola, Bulgaria and Poland), in the amount of US$243.43 million, and US$52 million to Brazil related to the US$125 million state-guaranteed loan to Aeroportos de Moçambique.

According to the Ministry of Economy and Finance, the government is continuing to negotiate with the bilateral creditors with a view to reaching a solution.

There are also overdue loans to the Paris Club group of countries, which lend money to poor countries.

“After the signing of the last draft with the Paris Club, in November 2001, the Government of Mozambique asked its bilateral creditors not members of the Paris Club to grant debt relief under the terms agreed with that body, that is, the cancellation of at least 95% and rescheduling of 5% over 23 years, including a period of grace of six years, at market interest rates,” the note from the Ministry of Economy and Finance reads.

In fact, the debt to creditors who are not members of the Paris Club, and whose terms are not comparable with the terms of the Paris Club, has not been paid, given that the Paris Club agreement also provides that the country cannot make payments for previous agreements which may have been signed under conditions not comparable to those in force, which condition has caused Mozambique to accumulate arrears in its debt stock.

However, the government says it is maintaining a “negotiating effort” to achieve debt relief with creditors who are not members of the Paris Club, even if not all members of the Paris Club adhere to this relief.

“Bilateral creditors who are not members of the Paris Club have not agreed to grant relief on terms compared to that of the Paris Club, allegedly because they are not underwriters of or subscribers to this initiative,” the ministry points out.

By Edson Arante

Source: O País