Who should pay the hidden debts?

expect delays

The Mozambican State has no money, yet it must honour its commitments in order to avoid continuing penalisation by rating agencies, legal expert Ignésio Francisco from Mozambique’s Centre for Public Integrity (Centro de Integridade Pública, CIP) says.

The CIP maintains that, according to the national administrative system, the so-called sovereign debt is invalid and may be declared void, but legal experts say that if this happens, it will further affect the country’s credibility in international markets. Some sectors of Mozambican society and beyond are defending the theory that the whole process behind the so-called hidden debts is void.

The CIP’s most recent analysis of the subject argues that the contracting of debts for Ematum, Proindicus and Mozambique Assets Management (MAM) violated the constitutional principle that it is within parliament’s purview to authorise the government to borrow or lend, so these debts must be considered void.

Legal experts say that if it is legally established that the debts are indeed void, the main implication would be releasing the Mozambican government from its responsibility to pay these obligations and the transfer of liability to the entities that contracted them.

“The most immediate consequence I foresee is these debts being charged to the people who were behind them and the State being relieved of these obligations”, lawyer José Machicane says.

But Francisco argues that the Mozambican State, although it has no money, must honour its commitments if it wishes to avoid being further penalised by the rating agencies. Recently, Portuguese sociologist Boaventura Sousa Santos also argued that it was important to identify the nature of the debts clearly.

The objective would be to ascertain the Mozambican State’s degree of responsibility for these debts, bearing in mind that the State acted only as guarantor and not as principal debtor, therefore it would only assume the debt in case of default by the principal debtors, which are in this case public companies.

Source: VOA Português

Mozambique’s economy grew 3.7% in the second quarter

According to the National Statistics Institute (Instituto Nacional de Estatística, INE), the Mozambican economy grew by 3.7% year-on-year in the second quarter of 2016, representing an average growth in the first half of 4.4%. According to INE, this demonstrates a “stagnation of economic activity” in the second quarter compared to the previous one.

The INE data indicates that the behaviour of the economy in the second quarter was predominantly influenced by the secondary sector, with 9.4% growth. This was largely influenced by the construction sector with an increase of 13.6%. This was followed by the tertiary sector, with overall growth of 4.8%, driven by transport, housing, information and communications.

In terms of gross domestic product (GDP), agriculture, livestock, hunting, forestry and fishing had the most weight, accounting

for 26.6%. The overall increase in GDP stood at 4.4%, according to the INE. This is higher than the government’s indication of 4%.

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