IMF Deputy Director for Africa, David Owen, declined to comment on the reaction of creditors to requests for the restructuring of Mozambican debt, but said that the payment margin was very low.
“Creditors will take their own positions and the IMF will not get directly involved in the details of the discussions with the government”, Owen said at the end of a meeting with Prime Minister Carlos Agostinho do Rosário in Maputo over the
announcement by the creditors that any restructuring would be subject to the conclusion of an independent international audit of the so-called hidden debts.
On 25 October, the Mozambican government admitted its inability to pay the next instalments of its obligations to creditors, proposing a restructuring of payments and renewed financial assistance from the IMF.
The request for restructuring concerns the Ematum debt. Ematum was one of the beneficiaries of the so-called hidden loans whose financial liabilities were converted seven months ago into Mozambican sovereign debt securities in the amount of US$727-million (€652-million).
The deputy director of the IMF declined to comment on the US$60-million (€53million) January 2017 installment but noted that: “what prompted the authorities to ask the lenders for a restructuring was an extremely reduced margin for the payment of debt service in the coming years”.
Following the meeting with the Prime Minister, also attended by Finance Minister Adriano Maleiane and the Fund’s representative in Maputo, Ari Aisen, Owen welcomed “the correct measures that the government has taken recently in connection with the hidden debts”, but warned that more would have to be done.
“They are important measures, but it is a work in progress. More needs to be done in all these matters”, he said, referring to monetary and fiscal decisions to contain metical devaluation and rising inflation, the hiring of an external auditor to analyse the debts of the three companies benefiting from the hidden loans and the request for the restructuring of the external debt. The IMF deputy director said he expected the audit to start “very soon” and the process to be “relatively fast” (less than 90 days), and that it would also be necessary to wait for negotiations with Mozambique’s creditors to enter a sustainable path.
“All of this will require some time”, Owen said, confirming the announcement by the Banco de Moçambique of an IMF technical mission to Maputo in early December which “will discuss these matters with the Mozambican authorities”.
Finally, Owen warned that, according to the IMF, the government’s adjustment measures should “pay attention to the poorest sectors of society”, already the most affected in the country.
The visit of the IMF deputy director to Maputo is part of ongoing contacts with the Mozambican government since the revelation in April of large government guaranteed loans to two state-owned enterprises in addition to the Ematum loan, triggering a foreign debt crisis.
The revelation of the new hidden debts prompted the IMF to suspend a Mozambique financing programme, a step followed by donors to the State Budget, who also cut off payments.
Despite praise from the IMF for measures taken by the government recently, the resumption of aid to Mozambique is subject to the rules of the Fund, which prevent financial aid to a country in ‘debt distress’ as measured by five indicators, on all of which Mozambique fails to quality for help.
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