Mozambique: Hidden debts still under investigation have already been “legalised” by Frelimo

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Mozambique: Hidden debts still under investigation have already been “legalised” by Frelimo

5:15 CAT | 27 Apr 2017

DW (File photo) / Members of the Frelimo government in parliament, June 2016

Frelimo approved the 2015 General State Account in parliament on Wednesday, despite it containing the debts contracted by two companies with state guarantees and without the knowledge of parliament.

The so-called hidden debts contracted by Proíndicus and Mozambique Asset Management with state guarantees and without parliament’s knowledge in 2013 and 2014 are now included in the General State Account. These debts total more than US$1.1 billion.

The 2015 General State Account does not give any reason for not including these loans in the General Accounts of the respective years (2013 and 2014), according to the observation by the Administrative Court, which supervises the state accounts.

This Administrative Court also states that the value of the guarantees issued in favour of the two companies exceeded the limits allowed by law. An inquiry by a parliamentary commission also found that there had been a breach of the law in the contraction of the two debts.

The decision approving the General State Account of 2015 passed on the votes of Frelimo, the ruling party, as last year when parliament approved the addition of the 2014 Ematum loan, also contracted without the knowledge of Parliament.

The approval of this resolution comes at a time when the three debts, estimated at about US$2 billion, are being investigated in an international audit expected to present its results this week.

VTB Wien — Russian bank VTB was one of the lenders involved

Renamo boycotting session

The largest opposition party, Renamo, boycotted the debate and vote on the resolution on Wednesday.

The head of the Renamo parliamentary bench, Ivone Soares, told a press conference that the contraction of these debts constituted a fraud on the state and international creditors and increased the impoverishment of the Mozambican populations.

“It is unacceptable for the Mozambican state to take on private debts and turn them into debts which all Mozambicans are called upon to repay. It is our position that it is unacceptable that the state takes on these illegal debts, where there was no respect for our Constitution at the time they were contracted.”

In Renamo’s opinion, the only way to solve the problem is to prosecute the perpetrators of the violation of the law.

Mosambik Parteien Ivone Soares von RENAMO — Ivone Soares, head of the Renamo parliamentary bench

MDM spokesman Fernando Bismarque said that his party voted against because “we think it’s an illegal bill because it tries to use something [debts] that was contracted in absentia of the parliament. The General State Account of 2015 is unconstitutional because it violates the Budget Law, the SISTAFE (Financial Administration System) Law and the Constitution of the Republic.”

Frelimo: “The Assembly of the Republic is sovereign”

Frelimo voted in favour of the resolution. According to bench spokesperson Edmundo Galiza Matos Júnior, the registration of the debts contracted by the two companies did not result from an illegal process. Galiza Matos added that the government had the opportunity to clarify what had happened and how accounting processes of this nature are made when there are possible errors.

“The government requested the registration of the public debts in the scope of the General State Account of 2015. We were to carry this exercise out for accounting purposes. The Assembly of the Republic is sovereign and with the votes that were cast, it did so,” Galiza Matos said.

Source: Deutsche Welle