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STV (File photo) / António Francisco, seen here during an interview to STV news channel.
Mozambican economist and researcher Antonio Francisco believes that the recent discovery of large debts not declared by the Mozambican authorities has thrown the country into “disrepute and ridicule” and will have a negative effect on the economy.
“Only a blind optimist, someone who behaves as if things could never get worse than they are, could entertain the idea that the national economy is on track,” António Francisco, researcher at the Institute of Social and Economic Studies (IESE) in Mozambique, says.
The hidden debt, he goes on to say, significantly alters the macroeconomic analysis of Mozambique, and the International Monetary Fund (IMF) is not yet in any position to assess its impact.
“I look forward to the next assessment the IMF shares. In fact, many people will be waiting with anxiety and curiosity, for a number of reasons,” Francisco notes.
According to Francisco, Mozambique’s net international reserves had already been shaken by the US$850 million government-guaranteed loan to the Mozambican Tuna Company, Ematum.
“We are facing an amazing amount of debt, allegedly for the purchase tuna fishing boats, but here we are three years later and the boats remain stuck in port without producing anything,” he notes.
Until proven otherwise, Francisco continues, the country has reason to suspect that we are facing a scandalous example of highly speculative, unconstitutional and probably fraudulent credit for non-productive purposes.
After the government’s admission of hidden debt exceeding one billion US dollars, the academic says Mozambicans will have no choice but to wait and see if there are other undisclosed debts in public companies.
The Wall Street Journal reported in late March a loan of US$622 million to the state company Proindicus, contracted in 2013 through banks Credit Suisse and Russian VTB Bank, which, incidentally, invited investors to increase the value to U$900 million , one year later.
On Tuesday, the Financial Times reported that the Government of Mozambique approved another loan of US$500 million dollars to a public company.
On the same day, the Prime Minister met with the director general of the IMF, Christine Lagarde, and, according to a statement from the financial institution, recognized the existence of a value greater than one billion dollars of external debt of Mozambique that had not been reported.
According to a confidential prospectus prepared by the Ministry of Finance of Mozambique and delivered last month to investors in the Ematum obligations, and that the Lusa had access to on Thursday, the volume of public debt of Mozambique increased from 42 percent of GDP in 2012 to 73.4 percent in 2015.
The ratio of the value of government debt to gross domestic product (GDP) increased from 42 percent in 2012 to 52 percent, 56.6 percent and 73.4 percent of the country’s wealth in the next three years.
“The total public debt [including domestic debt, external and guaranteed by the State] amounted to 56.6 percent of GDP in 2014 and is expected to reach 73.4 percent in 2015,” reads the confidential document that investors in Ematum bonds analyzed before deciding to exchange them for new sovereign debt securities last month.Source: Lusa
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