The International Monetary Fund (IMF) approved the Mozambique government’s policy to pay bilateral and multilateral loans and to fail to pay commercial debt related to US$2 billion in previously “hidden debt,” the Africa Monitor newsletter reported.
The report, citing an announcement released recently in Washington, said that the IMF may resume funding to Mozambique under a new programme, to be completed by mid 2017 despite arrears to private creditors, which would not be possible if the defaulted debt were to countries or international organisations.
The three conditions set by the IMF are:
- -The acceptance by the Government of Mozambique of a “structural adjustment plan”, which will include austerity measures, privatisations, reducing the weight of the state and tax reform, to be outlined in a Policy Support Instrument (PSI);
- Completion of the audit of undisclosed loans by US company Kroll and;
- Clear progress in negotiations with private creditors that are holders of bonds issued by public companies with a State guarantee.
Negotiations with private creditors with regard to so-called hidden debts, two of which are considered “unconstitutional” because they exceeded the amounts that exempt them from parliamentary approval (ProIndicus and MAM), remain at a standstill.
Lenders and investors will be available to speed up negotiations to ensure the return of investment and have already coordinated with the IMF for this risk to be covered in the credit that will be granted, but the government of Mozambique wants a substantial reduction of the debt, from US$2 billion to less than US$1 billion.
There are a variety of loans in question – US$726 million in eurobonds for tuna company Ematum and US$622 million and US$535 million in loans contracted by public companies Prodindicus and Mozambique Asset Management, respectively, which were later declared illegal by the Administrative Court of Mozambique.