Mozambique report reveals hidden debt of 1.6 billion

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Mozambique report reveals hidden debt of 1.6 billion

2:04 CAT | 25 Apr 2016

The 2014 debt that the government of Mozambique announced in March to investors of debt securities of the Mozambican Company Tuna (Ematum) is US$1.6 billion more than the amount declared in the official documents.

According to the confidential Ministry of Finance prospectus delivered last month to Ematum investors, total public debt amounts to US$9.6 billion, an amount which includes the new state-guaranteed loans revealed in recent weeks but which do not appear in the public accounts.

Data released by the Mozambican government on 20 November last year at a conference on public debt in Maputo reveals that, in 2014, public debt totalled 8.1 billion dollars, representing 48.9 percent of GDP (gross domestic product).

These figures already included US$500 million of the US$850 million loan to Ematum declared in the state budget, while the other US$350 million guaranteed by the government was not included.

For 2015, in the 198-page investor prospectus detailing the repurchase of Ematum debt securities and the launch of the sovereign debt, the Ministry of Finance sets the expected volume of debt at 11.1 billion, citing the Ministry of Economy and Finance, the National Institute of Statistics and the Bank of Mozambique.

The 2015 Mozambican public debt figures are not yet available in the official data, but a Ministry of Economy and Finance spokesman quoted on the Zitamar news website sets the value at US$8 billion, about US$3 billion less than the prospectus estimate.

In late March, the Wall Street Journal reported a US$622 million loan to the state company Proindicus, contracted in 2013 through banks Credit Suisse and Russia’s VTB, with an option to increase the value to US$900 million after one year.

On Tuesday, the Financial Times revealed that the government of Mozambique approved another loan of US$500 million to a public company.

On Tuesday, the Mozambican prime minister met the director general of the IMF, Christine Lagarde, and, according to a statement released after the meeting, recognized the existence of more than US$1 billion dollars of Mozambican external debt that had not been declared.

For the IMF, this was “an important first step”, to be followed by further information and documentation by the Mozambican government so as to “establish the facts and allow the Fund to make a full evaluation” and “identify steps to restore confidence”.

The IMF cancelled a planned mission to Mozambique last week due to disclosures about alleged hidden loans, and suspended the payment of the second installment of a loan to the Mozambican government.

On Saturday, the World Bank director for Mozambique told Lusa that the revelation of a new loan under the Ematum case may increase the risk of excessive debt and affect resources provided by the institution in the future.

The Mozambican prime minister said on Thursday that the meetings with the IMF and World Bank and US officials in Washington on government debt of Mozambique produced “encouraging results” and called for people to remain calm.

“Soon, the government will share officially, through appropriate channels, the results of this mission. But I am pleased to report that so far the meetings have produced encouraging results,” Prime Minister Carlos Agostinho do Rosario wrote on his Facebook page.

Source: Lusa