Von Burgsdorff says Mozambique does not have access to international markets

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Von Burgsdorff says Mozambique does not have access to international markets

3:42 CAT | 30 Jun 2016

eeas.europa.eu / Sven von Burgsdorff

The EU representative in Mozambique, Sven von Burgsdorff, told Lusa on Wednesday that Mozambique is unable to resort to international markets to secure funding and said that the IMF “is the path to success”.

“Interest rates for Mozambique in international markets are above 18 percent, the same level as Venezuela, which undermines any access. It is not possible. Which is why the trust of international partners is very important and the International Monetary Fund is the path to success,” the diplomat told Lusa in Lisbon.

Von Burgsdorff, who spoke to Lusa the day after interest rates demanded by investors to transact sovereign debt hit a record high of 19.18 percent, said the IMF would have a decisive role in the future of the country, but that “the ball is in the government’s court”.

“A financial bailout was never on the cards. The idea of the IMF [its visit to the country, which ended last week] was only to clarify the public debt numbers and the measures needed to restore macroeconomic balance. [The IMF] never spoke about a [assistance] program in the near future because clarification on the undisclosed loans is still lacking,” he added, noting that “the government is very aware of it because the IMF was quite clear and the ball is in the government’s court”.

The Mozambican government has promised the IMF and international partners to present a set of measures to ensure that the assumption of financial commitments will be more transparent and that cases like the three loans to public companies amounting to more than US$1,400 million will never again be hidden from international partners.

“An international forensic audit is a crucial point to clarify these three loans, how they were made and where they went,” von Burgsdorff told Lusa. “The IMF says that an international audit is essential” and therefore an important step “to restore confidence not only between the government and donors,” but also between citizens and the state itself, “because it is the Mozambican taxpayer who has to pay the debts, and this is very important for the donors”.

Asked about the possibility of the G14 international donor group, whose rotating presidency passes from Portugal to the European Union tomorrow, resuming financial assistance soon, von Burgsdorff said: “We can not analyse the impact of our support to the budget if the disbursements made in 2013, 2014 and 2015 are not clarified, because we gave budget support and cannot imagine repaying illicitly contracted debts. It does not make sense.”

The decision on budget support “is pending, but I have confidence that the authorities will take the necessary decisions to restore the confidence of donors,” the German diplomat stressed, adding that he expected a formal response from the government in September, at which time “the Fund can come back at any time on the basis of these decisions”.

Source: Lusa