Mozambique: Health Minister challenges HCM to migrate from care to prevention - Watch
Notícias / President Filipe Nyusi
Mozambique is successfully resisting the donor strike and will not give in. That was a key point of New Year messages of President Filipe Nyusi and Bank of Mozambique Governor Rogerio Zandamela.
Both were open that the economic crisis was caused by the sudden cut in budget support and aid directly to the government in April 2016, when the IMF and donors discovered $2 bn in secret debt. An audit by Kroll could not account for more than half the money, and it is assumed some of it went into the pockets of senior Frelimo figures. IMF and donors have said that direct aid will not be restored until Mozambique says what it did with the money, which, in year-end statements, it steadfastly declined to do.
In his state of the nation speech to parliament on 20 December, Nyusi said that the debts “contracted by the companies Proindicus, MAM and Ematum but authorised by the government in 2013” were not included in information given to the International Monetary Fund. As a result, the “IMF and international budget support partners have suspended, since 2016, financing of the state budget”. In response, the government gave more information to parliament and the IMF and initiated the Kroll audit. It also made budget cuts, increased tax collection, increased borrowing, and improved management. These all show how “resilient” the people are, Nyusi said.
“The Government has adopted economic measures with a view, on the one hand, to stabilize the economy, and on the other, to restore the confidence of the partners. These are essential steps for the resumption of direct budget support,” Nyusi told parliament. The message was clear: the President expects donors to end their strike in response to better economic management and because the country has shown it can survive without direct aid, but without additional concessions on information on the secret debt.
“Even with the adversities that the country has faced, the national economy shows positive signs. … Because we are a resilient people, we can, with all pride and without fear, affirm that the State of the Nation is challenging but encouraging,” he concluded.
The hidden debts were ‘authorised’ and ‘guaranteed’ by the state, Nyusi told parliament. “The Government has been following the process of restructuring the business plans of the companies benefiting from the state guarantees so that they can resume the fulfilment of the commitments assumed.” And the Administrative Tribunal report issued in November refers to “loans taken out with guarantees”.
The full state of the nation speech (in Portuguese) is on: http://bit.ly/2lVvt8e
Zandamela: return to normal limited by aid cuts due to hidden debt
In 2017 “there was a gradual return to the normality of the economic and financial indicators, which had deteriorated substantially in the previous year,” Bank of Mozambique Governor Rogerio Zandamela said in his end of year statement on 18 December. But the crisis is not over. “Government revenue remains below that required to finance expenditures, because of the suspension of direct support to the budget by donors and cooperation partners, which poses an additional challenge to the fiscal sector.” http://www.bancomoc.mz/fm_pgTab1.aspx?id=111
Zandamela highlighted that inflation peaked at 27% in 2016 but has fallen to 7%; devaluation reached $1 = MT 80 but the Metical has recovered to $1 = MT 60; and reserves which fell to less than 3 months of imports are now at 7 months, due in part to the payment of $352 mn in capital gains tax by ENI relating to the sale of part of its gas field.
Banks profit from secret debt
Nyusi proudly told parliament that government had found more Mozambican investors, in response to the need to sell more treasury bonds in order to finance the government deficit caused by the cut in aid. In the three years since Nyusi took office, domestic debt has tripled from Mt 30 bn (then $1 bn) to MT 101 bn (now $1.7 bn)
Aderito Caldeira of @Verdade (4 Jan, 6 Dec) points out that most bonds are short term so government is actually selling MT 115 bn in bonds each year. The 2018 budget includes MT 19.2 bn ($ 320 mn) for interest payments for this domestic debt (at a time it is not repaying foreign commercial debt). By analysing their accounts Caldeira found that the three big banks are the main bondholders and are making large profits. In 2016 their profits from government bonds were: Millennium Bim (MT 4.4 bn, $ 73 mn), Banco Comercial e de Investimentos (MT 2 bn, $33 mn), and Standard Bank (MT 2.3bn, $ 38 mn).
Interest rates down 1.5%
The Bank of Mozambique’s Monetary Policy Committee (CPMO) on 22 December cut its benchmark interest rates by 1.5%. The Interbank Money Market Rate (MIMO – effectively the base or prime rate) falls from 21.0% to 19.5%. The Standing Lending Facility (on money borrowed by commercial banks from the central bank) falls from 22.0% to 20.5% per cent, and the Standing Deposit Facility (the rate paid by the central bank to the commercial banks on money they deposit with it) falls from 15.5% to 14%. The Compulsory Reserves Coefficient – the amount of money that the commercial banks must deposit with the Bank of Mozambique – remains unchanged at 14%. (AIM En 22 Dec)
Importing food that could be grown locally
Chickens, eggs, onions, tomatoes and other foodstuffs that are commonly grown in Mozambique were not produced in sufficient quantity for the festive season, admitted the deputy director of internal trade of the Ministry of Industry and Commerce, Susana Mafuiane. Instead, the ministry had to arrange imports from South Africa, Malawi, and Zimbabwe. Imports of tomatoes reached 130 tonnes per day. (AIM Pt 3 Jan)
Good for the top, bad for the rest, says civil society
“The State of the Nation was good for the top leaders of the country, but bad for the rest of the population,” says a joint civil society report released 19 December. “In 2017, the population remained unemployed, insecure and poorer” – without public transport, without medicines, “a victim of a systematic violation of human rights” by the police whose inability “to fight the crime means the population lives in fear “. However, “the elite of the country continues with their pattern of luxurious consumption.” http://bit.ly/2lWWeZV
State auditor confirms 2016 payments
The Tribunal Administrativo (TA, state auditor) in November submitted to parliament the 2016 accounts, and some parts on the secret debt are published in Savana (5 Jan). The TA refers to the MAM and ProIndicus debts as “guaranteed”, and show ProIndicus “debt payments” of $67.5 mn in 2016: $59 mn to Credit Suisse London ($24.8 mn in capital repayments and $33.9 mn in interest), $ 895,000 in interest to VTB capital, and $7.9 mn to Palomar. The Kroll report (3.7.1) says that the $7.9 mn was paid to Palomar for advice to the Ministry of Finance. Palomar is owned by Privinvest, the contractor which received all of the loan money (less bank commissions) and Andrew Pearse, who worked for Credit Suisse on some of the Mozambique loans (Wall Street Journal 11 Aug 2016).
Savana also reports that the state holding company IGEPE (Instituto de Gestao das Participacoes do Estado) in 2015 took a $20.5 mn loan from that state owned Banco Nacional de Investimento (BNI). The loan was guaranteed by the National Treasury Directorate and was used to make a payment on the Ematum bonds to Credit Suisse. At the time, Adriano Maleiane was chair of BNI. The following year Maleiane became finance minister. Savana also points to Maria Isaltina Sales Lucas, who was National Treasury Director and signed one of the illegal loan guarantees. She later received $95,000 from Ematum, according to Kroll, and is now Deputy Finance Minister.
By Joseph Hanlon
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