Price of secret debt: IMF says no to new programme talks, while World Bank calls Mozambique a ‘fragile’ state

corruption_mozambique

The IMF Thursday made clear there was no chance of even discussing a new programme until Mozambique gives more information of how the money from the $2 bn secret debt was used.

“We believe it is key for the authorities to provide the missing information, highlighted in the audit summary and in particular critical information gaps … regarding the use of loan proceeds. So taking steps to fill the information gaps and to strengthen transparency and ensure accountability will be critical to progressing toward a new program,” Gerry Rice, IMF spokesperson, told a Washington press conference on 14 September. http://www.imf.org/en/News/Articles/2017/09/14/tr091417-transcript-of-imf-press-briefing

Meanwhile, in a report issued last month the World Bank for the first time declared Mozambique to be a “fragile country”. The report is the annual “Country Policy and Institutional Assessment (CPIA) Africa” which ranks countries on 16 policy assessments. It notes that “the sharpest fall in the aggregate CPIA score was witnessed in Mozambique and South Sudan …. For Mozambique, the decline reflects the economic crisis in the country following the discovery of hidden debts in 2016.” In 2016 Mozambique was considered to have had the biggest drop in economic management, and this was the first time that Mozambique total score was so low that it is considered fragile. Mozambique is now in the same category as Sierra Leone and Malawi.

Mozambique had high CPIA scores and was well above average but started to fall in 2013 and by 2016 was low enough to be called “fragile.” There are four categories. Compared to 2008, Mozambique is unchanged in “equity” and “public sector management”, has fallen slightly in “structural policies”, but has fallen dramatically in all sectors of “economic management”. Particularly notable is that public debt was 125% of GDP last year, higher than all other sub-Saharan African countries except Cape Verde. http://documents.worldbank.org/curated/en/891501500349324004/pdf/117514-REVISED-96p-WB-CPIA-Report-July2017-ENG-v16.pdf

Source: News reports & clippings

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