Mozambique’s response to the secret debt revelations – Joseph Hanlon

Login

Register

http://www.clubofmozambique.com/

Mozambique’s response to the secret debt revelations – Joseph Hanlon

5:26 CAT | 26 Apr 2016

The Bank of Mozambique said it made $200 mn in repayments in foreign loans last month, mostly for Ematum, only by dipping into resident’s dollar deposits. (Zitamar 21 Apr) The central bank also raised the base lending rate from 10.75% to 12.75%.

Meanwhile the Metical has plummeted as people try to buy dollars. Rates of up to Mt 60 = $1 were reported on the parallel market. On Friday the Bank of Mozambique quoted Mt 53 = $1 and Mt 3.7 = Rand 1. This is compared to 50 and 3.2 a month ago, on 24 March, and 47 and 3.0 on 29 February.

Mozambique’s former Information Minister, Teodato Hunguana, and a member of the Frelimo Central Committee, told O Pais (22 Apr) that at its meeting the previous week the Central Committee “demanded that explanations be given, not only to Frelimo members, but to the nation. The nation has to know what is really going on.” At the Central Committee meeting, “it was clearly said that we have to see what” part of the debt is for military purposes and what part for “private interests, and it is those interests that must be called upon to answer”. He warned there was a danger of Mozambique being recolonized by the international creditors, as happened with Greece and Portugal.

The Budget Monitoring Forum (Forum de Monitoria do Orcamento), has demanded “an exhaustive audit of the Mozambican public debt … in order to know the real amounts involved, the creditors and the payment period for each of the debts”. The Forum is a coalition of some of the main civil society organisations, including the Community Development Foundation (FDC), the Centre for Public Integrity (CIP), and the Community Radio Forum (FORCOM). The report (in Portuguese) has a good list of all known non-concessional debt. debt

CIP has published a report (Portuguese only) pointing to “the fact that the government has not yet seen the necessity of informing the Mozambican people or giving an explanation to parliament,” three weeks after the secret loans were revealed. “Desastre da divida publica em mocambique: O governo vem violando o principio de transparencia orcamental”. http://www.cip.org.mz/article.asp?sub=moc&docno=459

Credit Suisse has come under heavy criticism for making secret loans for military equipment and not telling other borrowers or the IMF. The Financial Times quoted a “foreign diplomat” to say “Credit Suisse has some quite big questions that so far it has not really wanted to answer.” Credit Suisse has some record of misjudged secrecy; earlier this month it said it faced potential operational losses of $3.6 billion, in part because $1 bn in illiquid trading positions were kept secret from top bank officials.

Source: Joseph Hanlon News