BRITAIN SUSPENDS FINANCIAL AID TO MOZAMBIQUE

The British government on Thursday announced that it is suspending financial aid to Mozambique, in the wake of the scandal over undisclosed loans.Earlier this month, it became clear that almost 1.4 billion dollars worth of loans, guaranteed by the Mozambican government, had not been disclosed, either to the Mozambican public or to the International Monetary Fund (IMF).The loans date from 2013-2014 and were contracted by the previous government, headed by President Armando Guebuza. Judging from the statement given by Prime Minister Carlos Agostinho do Rosario at a Maputo press conference on Thursday, the Guebuza government did not inform its successor about these loans.A spokesperson for the British Department for International Development (DFID), cited in the British government statement, said “the existence of the loans, and the lack of transparency around them, is deeply disappointing”, and warned of “serious implications for Mozambique’s economy for the medium-term”.“This appears to be a serious breach of trust, so we are working closely with other international partners to establish the truth and coordinate an appropriate response”, the spokesperson added. “We support the IMF’s call for full disclosure of loan transactions and debt to the people of Mozambique. Any undisclosed debt-related transactions, irrespective of their purpose, need to be reported transparently and publicly”“The UK follows strict rules and procedures when providing aid and our priority continues to be supporting the people of Mozambique to lift themselves out of poverty and build a more prosperous country”, he said.The British aid has not been cancelled, but delayed until further notice. This will mainly affect British support for the Mozambican budget. For many years, Britain has been one of the main donors of direct budget support.The DFID statement added “there is no evidence to date that there has been any misuse of UK funds”.The British suspension of aid follows a report from the World Bank that it too is suspending budget support.