africa Currency Economy Finance Gas Government Mozambique Natural Resources Nigeria oil

Mozambican President: No Tug of War With IMF

Mozambican President Filipe Nyusi declared on Saturday that there is no tug of war between the Mozambican government and the International Monetary Fund (IMF) over the government-guaranteed loans secretly contracted by the previous government, led by his predecessor Armando Guebuza.

Speaking to the Mozambican community in the US city of Houston, Nyusi confirmed that an independent audit of the loans will be undertaken, but he added that it will be headed by the Mozambican Attorney-General’s Office (PGR).

Managing Director of the IMF Christine Lagarde
Managing Director of the IMF Christine Lagarde

This follows Nyusi’s meeting in Washington on Thursday with IMF managing director Christine Lagarde. According to an IMF statement, Lagarde “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”.

The statement added that Lagarde “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”.

There were two undisclosed government-guaranteed loans made by Credit Suisse and the Russian bank VTB in 2013-14 to the security related companies Proindicus (622 million US dollars) and Mozambique Asset Management (MAM – 535 million dollars). When these loans became public knowledge in April this year, the IMF suspended its programme with Mozambique, including the second instalment of a 283 million dollar loan from the Fund’s Standby Credit Facility (SCF).

Others among Mozambique’s international partners followed the IMF’s lead and suspended financial aid, included all 14 donors and institutions that had previously provided direct support to the state budget.

Nyusi told the Houston meeting that the difficult phase the country is passing through is not due exclusively to the foreign debt, but also to such factors as the severe drought that hit southern Africa this year, and the depreciation of the Mozambican currency, the metical.

A further important issue, he added, is that Mozambique does not yet produce enough to meet its basic needs. He insisted that country must strive to increase production, productivity and competitiveness, in order to increase exports and reduce imports.

While in Houston. Nyusi visited the premises of the Anadarko Petroleum Corporation, the operator of the Rovuma Basin Offshore Area One, off the coast of the northern Mozambican province of Cabo Delgado, where recoverable reserves of at least 75 trillion cubic feet of natural gas have been found.

Anadarko plans to set up a factory producing Liquefied Natural Gas (LNG), but has not yet announced its final investment decision. Total investment is likely to be in the order of 15 billion dollars.

The Anadarko chief executive officer, Al Walker, told reporters that the company expects to announce the investment decision “by next year”. If that happens, the first LNG could be produced in 2022 or 2023.

Walker said that in his meeting with Nyusi the two men discussed the resettlement of people living in the area where the LNG factory will be built, in the Afungi Peninsula, in Palma district, and other “unfinished contracts”.

The agreement in principle with the IMF on the audit of the previously undisclosed loans is the main outcome of Nyusi’s visit, and may contribute to normalizing relations.

A technical team from the IMF is expected in Maputo next week, and will discuss the terms of reference for the audit.

Source: AllAfrica

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.