Mozambique : Government should wait for court rulings before renegotiating Ematum debt – analysts

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Mozambique : Government should wait for court rulings before renegotiating Ematum debt – analysts

2:27 CAT | 28 Aug 2019

Ocean Eagle patrol vessel, [File photo: Defence Web]

The Mozambican government should wait for court rulings before renegotiating Ematum debt securities issued on the international market, two analysts told Lusa yesterday.

“The government is getting ahead of itself,” Mozambican economist and analyst João Mosca said on the day the invitation to debt holders to accept a new bond issue replacing those that Mozambique failed to pay was published.

The government, which already has an agreement with 60% of creditors, wants to obtain consent from another 15% by September 6 of this year in order to close the restructuring by the month’s end.

But João Mosca says that if the Government does not comply with the decisions of the Constitutional Council (CC) – which in June declared Ematum’s debt null and void – it will mean that state institutions do not respect each other and do not take responsibility.

“In this case we are in a state of non-law. It is a serious situation which will convey a negative impression of governance and of the state itself,” he comments.

Mosca criticised the argument of the Minister of Economy and Finance, Adriano Maleiane, who said that it was necessary to resolve the situation with Ematum creditors so that Mozambique could be released from default and re-issue debt on international markets.

“Does the government now want to go to international markets with the economic situation it has, rated ‘default’ and ‘junk’ in international rating agencies? It will find itself offered the highest interest rates in the world after Nicaragua,” he says.

On the other hand, “the investments that exist [in the country] are almost [all gas-related] and everything else is on standby. Going to the markets to do what, especially at election time? It’s an illusion,” he stressed.

“Let us wait for the courts and then act,” because otherwise “we are playing in the darkness with dilatory manoeuvres,” he concludes.

Baltazar Fael, a lawyer at the Centre for Public Integrity (CIP), says that the decisions of the CC are binding, and that the state should not restructure Ematum’s debt.

Mozambique has filed a lawsuit in London to annul what remains of the Proindicus debt (about US$600 million), Ematum’s sister company in the maritime project which contracted the so called ‘hidden debts’.

“It makes no sense for the Attorney General’s Office (PGR) to take legal action “against one slice of the hidden debts” while “the state wants to pay” another part, he said.

The lawyer warns that renegotiation will not recover the sums diverted.

“It is clear that this violated laws, norms and did not benefit any Mozambican involved. It makes no sense,” he concluded.

Between 2013 and 2014, during the presidency of Armando Guebuza, three state-owned companies contracted loans from international investors worth US$2.2 billion, which were allegedly used to illicitly enrich individuals while the themselves fell to the state accounts.

Proindicus was supposed to carry out coastal surveillance, Ematum tuna fishing and MAM building and maintaining shipyards, but they never operated as intended, the resulting law suits contributing to the worsening of the Mozambican crisis.

Source: Lusa