Mozambique: Who should pay the hidden debts?

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Mozambique: Who should pay the hidden debts?

2:08 CAT | 16 Aug 2016

The Mozambican state has no money but must honour its commitments in order to avoid continuing penalisation by rating agencies, legal expert Ignésio Francisco from Mozambique’s Centre for Public Integrity (CIP) says.

The CIP says that, according to the national administrative system, the so-called sovereign debt is invalid and may be declared void, but legal experts say that if this happens, it will further affect the country’s credibility in international markets.

Some sectors of Mozambican society and beyond are defending the theory that the whole process behind the so-called hidden debts is void.

The CIP’s most recent analysis of the subject argues that the contracting of debts for EMATUM, ProIndicus and Mozambique Assets Management violated the constitutional principle that it is within parliament’s purview to authorise the government to borrow or lend, so these debts must be considered void.

Legal experts say that if it is legally established that the debts are indeed void, the main implication would be the releasing of the Mozambican government from its obligation to pay these obligations and the transfer of liability for these debts to the entities that contracted them.

“The most immediate consequence I visualise is these debts being charged to the people who were behind them and the state being relieved of these obligations,” lawyer José Machicane says.

But Francisco argues that the Mozambican state, although it has no money, must honour its commitments if it not to continue being penalized by the rating agencies.

Recently, Portuguese sociologist Boaventura Sousa Santos also argued that it was important to identify the nature of the debts clearly.

The objective would be to ascertain the Mozambican state’s degree of responsibility for these debts, bearing in mind that the state acted only as guarantor and not as principal debtor, so would only assume the debt in case of default by the principal debtors, which are in this case public companies.

Source: Voa Portugues