Mozambique: Maleiane optimistic about talks with IMF – AIM report

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Mozambique: Maleiane optimistic about talks with IMF – AIM report

6:35 CAT | 01 Feb 2022

File photo: RM

There are “good prospects” for the current talks between the Mozambican government and the International Monetary Fund (IMF), according to the Minister of Economy and Finance, Adriano Maleiane, cited by the independent television station, STV.

The talks began, in virtual format, on Monday and are expected to last until 11 February. Much of the media claims that the purpose of the talks is to resume IMF direct support for the Mozambican state budget.

In fact, the IMF never provided direct budget support. However, a programme between the IMF and the government is clearly a prerequisite for any other partner to resume budget support.

Mozambique’s last programme with the IMF came to an abrupt halt in April 2016, when the full extent of Mozambique’s “hidden debts” was uncovered. Three fraudulent, security-related companies, Proindicus, Ematum (Mozambique Tuna Company) and MAM (Mozambique Asset Management, all effectively run by the Intelligence and Security Service (SISE), obtained loans of over two billion US dollars from the banks Credit Suisse and VTB of Russia.

The loans were only possible because the government of the day, under the then President Armando Guebuza, issued illegal loan guarantees, in flagrant violation of the 2013 and 2014 budget laws, and of the agreement with the IMF.

The IMF accused the government of concealing the true extent of Mozambique’s foreign debt, and suspended its agreement with the country. All 14 donors who did provide direct budget support followed suit, and halted further disbursements. The end of direct budget support cost the country more than 460 million dollars a year.

Maleiane told STV “the country needs support because there is a whole range of problems we need to solve and that are creating huge pressure on the budget, We need to find financing, and a programme with the IMF has the advantage of mobilizing others to support the country”.

He believed that the period until 11 February will be enough to ensure “a good outcome” to these talks.

The IMF has demanded, not only action on the “hidden debts” scandal, but also an improvement in the management of the public finances.

“That’s what we’re doing”, Maleiane claimed, “Now we need, for example, to improve the collection of revenue, and the interaction with taxpayers”.

Source: AIM