Mozambique explains $1.4 bn hidden debt

April 27, 2016
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, MOZAMBIQUE

MAPUTO – Mozambique said most of $1.4 billion in previously hidden loans had been used to fund maritime security and shipyards, a week after the IMF suspended the country over the undisclosed sum.

The Washington-based International Monetary Fund last Wednesday called off a staff mission to Mozambique, one of the 10 poorest countries in the world.

Maputo “did not inform (the IMF) at the time” of its debt, government spokesman Mouzinho Saide said Tuesday.

The Mozambican state was guarantor for a $622-million loan taken out by the public capital enterprise Proindicus in 2013 and another loan of $535 million to Mozambique Asset Management in 2014, Saide said.

Proindicus was created in 2012, primarily to protect areas where offshore gas is drilled, as well as fighting piracy, illegal immigration, drug trafficking and illegal fishing.

Mozambique Asset Management supports two shipyards in the country, providing maintenance services to public and private vessels.

“Bilateral credit” was issued for the sum of $221.4 million in 2009, the spokesman said, but did not specify the other country involved in the loan.

He did not provide any further details of the loans, or say whether the state had needed to step in to honour the debts.

The IMF said last week it had suspended aid to the African nation “pending a full disclosure and assessment of the facts”, on the unreported borrowing.

“It is difficult to imagine how the government will provide a satisfactory explanation for its handling of the debt,” wrote Anne Fruhauf of New York-based Teneo Intelligence in a note to investors.

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