Emails show that Mozambique assured the IMF in 2015 that there was no hidden debt

christine-lagarde_moz

The Mozambican government assured the International Monetary Fund (IMF) in 2015 that there were no loans beyond the financial operation of Ematum, an exchange of emails released by the financial information agency Bloomberg shows.

According to financial information agency Bloomberg, which bases the news on an exchange of emails between the IMF and the Mozambican government confirmed by the financial institution, the communications confirm that the Mozambican government deliberately concealed the Proindicus loan, saying that the value with state guarantee was part of the US$850 million Mozambican Tuna Company financial package.

“It was only in April 2016 that we learned that the Proindicus loan was a separate operation from Ematum and had obtained a guarantee signed by the authorities, something they had denied until then,” the IMF said in a statement to Bloomberg in which it explains that in May 2015 the Fund specifically asked the Mozambican government if the US$372 million loan from Proindicus, which was to be raised to US$622, was part of the Ematum financial package.

According to the IMF, Mozambique replied that the Ematum loan “was part of Ematum’s financial package and that the loans had not been signed as separate loans”.

According to Bloomberg, the exchange of emails between the IMF’s representative in the country, Alex Segura-Ubiergo, and the permanent secretary in the Ministry of Economy and Finance, Isaltina Lucas, who was later promoted to Deputy Minister of Finance, happened in May 2015.

Contacted by Bloomberg, a finance ministry spokesman said he was unaware of the IMF’s communications of that time, and Isaltina Lucas did not respond to requests for comment.

The hidden debt scandal broke in April 2016, when the Government acknowledged loans of US 622 million (EUR 556 million) to Proindicus and US$535 million (EUR 478 million) to Mozambique Asset Management (MAM). Together with public debt taken on the previous year, the total amounted to US$726.5 million.

Part of the debt resulted from the exchange by the government of state-guaranteed corporate bonds issued by Ematum in 2013 for sovereign bonds with higher annual interest rates and a longer maturity.

The combined amount as a proportion of gross domestic product threw Mozambique into a crisis unprecedented in the last decades, with international partners withdrawing support, the currency depreciating steeply and inflation rising to 25 percent by 2016, sharply increasing an already high cost of living.

Source: Lusa

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