Mozambique will “succumb” if it pays debt under current conditions – former PM

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Mozambique will “succumb” if it pays debt under current conditions – former PM

1:31 CAT | 05 Feb 2019

Photo: O País

Former Mozambican prime minister Luisa Diogo said on Sunday that Mozambique does not have the ability to pay off the ‘hidden debts’, and that if the government insists on doing so under current conditions, the country’s development project will succumb .

“This debt is not ours alone. We are not in a position to pay alone, and if we try to do so, we will succumb. Our development project will succumb,” the former Mozambican prime minister said on the sidelines of Heroes Day celebrations in Maputo.

Diogo noted that the investigations into the process showed that international players were involved in illegal borrowing, and Mozambique should therefore not unilaterally assume responsibility.

“There must be sharing, and sharing not necessarily just the value, but the revaluation of aspects related to payment: the extension, scaling, the relief of the annual payment among others. There’s a whole package which may help us fulfil [our mission] as a nation,” the former office-holder said.

Luísa Diogo, who was also Minister of Planning and Finance between 1999 and 2005, finds it inconceivable that “a minister of finance would go beyond the limits of his powers in this way and no institution would object.”

“We are no longer self-flagellating,” the former governor said, admitting she was “shocked” at the disclosure of the level of involvement of MP and former finance minister Manuel Chang, currently detained in South Africa under an international arrest warrant issued at the request of a US court investigating the ‘hidden debts’.

“He is a member I know, and thought I knew well. We worked together, and I always thought that we shared the same principles: to serve the state and work for the people,” she said.

Despite the challenges, Diogo says the Mozambican political and social project has not failed.

“We cannot feel that Mozambique is a failed project from a development point of view, but rather that this might serve as a lesson, and a timely one too. We cannot depend purely on the good faith of members of the government. We must update and fortify our institutions to avoid situations like this,” she said.

The American indictment contains detailed revelations about loans secured by the Mozambican state, between 2013 and 2014, in favour of public enterprises Ematum, Mam and Proindicus, concluding that served a corrupt scheme laundering money for the enrichment of various suspects.

The US investigation came to light when former finance minister Manuel Chang, three former Credit Suisse bankers and an intermediary of the naval company Privinvest were detained in different countries on December 29 of last year at the request of the US justice system.

By 2016, the revelation that the state had secretly guaranteed loans amounting to two billion US dollars led to the suspension of several lines of international support, contributing to the deterioration of the country’s economic prospects.

In November, Mozambique announced a preliminary agreement with 60% of Eurobond holders (public debt securities denominated in US dollars), according to which the country resumes payments in March and pays over five percent of tax revenues from natural gas from 2022 to 2033.

These bonds represent about US$725 million of a total of US$2 billion of unlawfully contracted debts, the only portion on which there is a preliminary agreement, still subject to various approvals.

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Source: Lusa