Mozambique government starts releasing details on debts – AIM

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Mozambique government starts releasing details on debts – AIM

9:52 CAT | 28 Apr 2016

The Mozambican government spokesperson, Deputy Health Minister Mouzinho Saide, on Tuesday justified previously undisclosed government debts as necessary for the “protection of strategic infrastructures”.

Speaking to reporters at the end of the weekly session of the Council of Ministers (Cabinet), Saide confirmed that the previously undisclosed government-guaranteed debts amounted to 1.382 billion US dollars.

These debts, mostly contracted in 2013 and 2014 by the previous government, headed by President Armando Guebuza, had been disclosed neither to the Mozambican public nor to the International Monetary Fund (IMF).

When, thanks to international press coverage earlier this month, the IMF discovered that the government had not revealed the true situation of the public debt, it cancelled a mission that was to have visited Maputo last week, and suspended the second instalment of a loan from the Fund’s Standby Credit Facility (SCF). Prime Minister Carlos Agostinho do Rosario visited Washington from 19 to 22 April for urgent talks with IMF and World Bank officials, and promised to make details of the debts public.

Saide took a step in this direction on Tuesday. He said the largest of the hitherto undeclared government guarantees went to the state company Pro-Indicus, which borrowed 622 million dollars from the Swiss bank Credit Suisse and from the Russian VTB.

Saide said Pro-Indicus had been set up in 2012 as the national authority responsible for protecting strategic national infrastructures and the country’s Exclusive Economic Zone (stretching for 200 nautical miles from the coast). At the time there were clear threats to the security of Mozambican waters, said the Deputy Minister, most dramatically shown in 2010 when Somali pirates seized a Mozambican fishing vessel, the “Vega 5”, off the coast of the southern province of Inhambane.

Other threats included illegal fishing, illegal immigration and drug trafficking, said Saide. “These threats, plus the need to protect the assets of oil and gas companies operating in the Exclusive Economic Zone, meant that Pro-Indicus had to acquire resources which would allow management of an integrated system of monitoring and protection”, he added.

Those resources included various types of boat, maritime patrol aircraft, radars along the length of the Mozambican coast, and contracts for satellite communications. Saide did not say how many boats or aircraft Pro-Indicus had acquired, or the unit cost of each of them.

The oil and gas companies he mentioned are working in the Rovuma Basin off the coast of the northern province of Cabo Delgado, where large reserves of natural gas have been found. There are two consortia here, one headed by the US company Anadarko, and one by the Italian ENI. Saide did not say whether they would be expected to pay for the protective services offered by Pro-Indicus.

A second government guaranteed loan, this time for 535 million dollars, went to the previously unheard-of company Mozambique Asset Management (MAM). Contrary to earlier reports, this money is not exclusively for the Logistics Base being set up in the Cabo Delgado provincial capital, Pemba, to support oil and gas operations.

Saide said MAM was set up to operate naval installations, including a shipyard in Pemba (presumably the Logistical Base) and one in Maputo. It would provide services for vessels belonging to the government, to EMATUM (Mozambique Tuna Company) and to Pro-Indicus, for commercial vessels, and for those involved in the offshore oil and gas industry. MAM would also build a mobile naval workyard for maintaining vessels.

He did not give any breakdown of the costs of these various activities, or explain what the relationship would be between MAM and Ports of Cabo Delgado (PCD), the company which holds the lease on the Pemba Logistical Base.

The final undisclosed debt mentioned by Saide is a 225 million dollar bilateral credit for the Ministry of the Interior, covering the period 2009-2014. Saide did not state who had lent the money, or which of the many areas run by the Ministry of the Interior it had been spent on. He did, however, promise that more details on the debts would be forthcoming in the near future.

Source: AIM