“Advances” in restoring confidence

The mission from the International Monetary Fund (IMF) that has been working in Mozambique since last Thursday believes advances have been made in restoring international confidence in the Mozambican government.The mission, headed by Michel Lazare, an assistant director at the IMF, met on Wednesday with Prime Minister Carlos Agostinho do Rosario. Lazare told reporters “the meeting was fruitful and there are advances in complying with the measures defined to restore confidence”.

But Lazare, who also headed the previous IMF mission in June, declined to give any details or say what measures he had in mind. He simply added that the meeting President Filipe Nyusi had in Washington earlier this month with IMF and World Bank officials, including IMF Managing Director Christine Lagarde, “were a success”.

After the meeting between Nyusi and Lagarde, the IMF announced that an independent, international audit will go ahead into the government-guaranteed loans for over a billion US dollars that were hidden from the Mozambican public and the IMF alike until April of this year.The controversy arises over three government guaranteed loans to quasi-public companies in 2013 and 2014, the closing years of the government of Nyusi’s predecessor, Armando Guebuza. Between them these loans amounted to over two billion US dollars, and added 20 per cent to the Mozambican foreign debt.One of the loans was public – this was the 850 million dollars of bonds launched on the European bond market by the Mozambique Tuna Company (EMATUM). The main banks handling the bond issue were Credit Suisse and VTB of Russia.

But the same two banks lent large, but undisclosed sums to the companies Proindicus (622 million dollars) and Mozambique Assets Management (MAM – 535 million dollars). Proindicus was set up to provide security to offshore oil and gas operations and to other shipping in the Mozambique Channel, while MAM is to sell naval maintenance and repair services.It is these latter two loans and their government guarantees that angered the IMF. When the loans became public knowledge in April, the IMF suspended its programme with Mozambique, including the second instalment of a 283 million dollar loan from the Standby Credit Facility (SCF). Other partners followed the IMF’s lead – notably all 14 donors and funding agencies that provided direct support for the Mozambican state budget suspended all further disbursements.

The IMF suspected corruption was involved in the loans. In an interview with the BBC in May Lagarde said “When we see a country and a programme with the IMF where international community money is committed, that is not respecting its financial disclosure engagement, which is clearly concealing corruption, we suspend the programme. We did that just recently with Mozambique.’The main demand raised by the IMF, and echoed by Mozambique’s other western partners, such as the United States and Britain, has been for an independent audit which would track down exactly what happened with all the money involved.At his meeting with Lagarde, Nyusi made it clear that the government now accepts this. An IMF statement on the meeting “welcomed the initial steps being taken on the agreed reforms and policies”, but also “stressed the need for further policy action aimed at stabilizing the economy and for more decisive efforts to improve transparency, in particular an international and independent audit of the companies that were funded under the loans disclosed in April 2016”.Lagarde, the statement said, “welcomed that the President indicated the Government of Mozambique’s willingness to work with the IMF on the terms-of-reference for this process—to be initiated by the office of the Attorney General—and to implement it”.