No sign of MAM meeting repayment deadline

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No sign of MAM meeting repayment deadline

9:57 CAT | 23 May 2017

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The Mozambican government has made it very clear that it will not make the payment of 133 million US dollars on the loan to the security-related company MAM (Mozambique Asset Management) that falls due on Tuesday.

Three companies, MAM, Proindicus and EMATUM (Mozambique Tuna Company), took out loans of over two billion dollars from European banks in 2013 and 2014. The only reason that Credit Suisse and VTB of Russia agreed to these huge loans was that the former Mozambican government, under President Armando Guebuza, illegally guaranteed them.

The guarantees broke the ceilings on guarantees laid down in the 2013 and 2014 budget laws, and also violated a clause in the Mozambican constitution which states that only the country’s parliament, the Assembly of the Republic, can authorise such debt. Yet the Assembly was kept entirely in the dark.

MAM’s loan was for 535 million dollars, none of which has yet been repaid. The first instalment, also for 133 million dollars, fell due in May 2016, but Mozambique defaulted. The creditor, VTB, made no attempt to enforce the guarantee.

The government insists that the prime responsibility for repaying the debt lies with the companies. Cited in Tuesday’s issue of the independent newssheet “Mediafax”, the spokesperson for the Ministry of Economy and Finance, Rogerio Nkomo, insisted that it is MAM that should pay the 133 million dollars.

The creditors should demand their money from the companies, he said. Only after exhausting this route could they turn to the guarantor (the Mozambican state).

“Mediafax” attempted to obtain a comment from the chairperson of the MAM board, Antonio Carlos do Rosario, but was predictably unsuccessful. Initially, Rosario answered the phone, but declined to answer the questions asked by the paper. Later, he seemed simply to have switched his phone off.

Rosario is the chairperson, not only of MAM, but also of Proindicus and Ematum, an indication that, in reality, all three companies are part of the same enterprise. The dominant shareholder is GIPS, which is owned by the social services of the State Information and Security Service (SISE).

Nkomo also pointed out to “Mediafax” that the government is trying to renegotiate the debts. Ever since October last year, when the Minister of Economy and Finance, Adriano Maleiane, met with the creditors, and informed them that Mozambique is quite unable to pay, the government has insisted that the debts must be restructured.

Nkomo said the negotiations are highly complex. The creditors are not merely the banks. The loan to Ematum took the form of a bond issues, and those bonds continue to be traded. The Proindicus and MAM loans were also parceled out and sold on to others. The government\s consultants are thus involved in discussions with the lawyers for the creditors.

It seems that the government would like to wrap the three loans up into one package, but this is by no means a done deal.

Recently, Maleiane declared “the process is continuing and we need to have it concluded as quickly as possible, because it’s part of the programme we have to discuss with the International Monetary Fund”.

When the true scale of Mozambique’s undisclosed debts became public knowledge in April 2016, the IMF suspended its programme with Mozambique, and made clear that there are two basic conditions for resuming normal relations.

One is an independent, international audit of Ematum, Proindicus and MAM. That audit has been carried out by the London branch of the US firm Kroll Associates, which is reputedly the top forensic auditing company in the world. The Mozambican Attorney-General’s Office has pledged to release the Executive Summary of the audit report by the end of May, and the full report within 90 days.

The second condition demanded by the IMF is more difficult. It is to bring Mozambique’s foreign debt to sustainable levels, which requires successful negotiations with the creditors, and so far there is little sign of cooperation from the creditors.

Source: AIM