20 February 2014

Mozambique: No Sovereign Wealth Fund Yet - Finance Minister

Maputo — The Mozambican government does not, at least in the short term, intend to use money from natural resources to set up a sovereign wealth fund, Finance Minister Manuel Chang told reporters on Wednesday.

Asked by the independent television station STV what the government would do with the latest capital gains tax paid on the sale of assets in the Rovuma Basin, off the coast of the northern province of Cabo Delgado, where enormous natural gas deposits have been discovered. Chang said the first priority was to clear the Value Added Tax (VAT) rebates which the government owes companies.

Three million dollars was paid to the Mozambican treasury in January as the second and final installment of the capital gains tax owing on the sale, by the Indian group Videocon, of its ten per cent holding of the Rovuma Basin Area One. The shares were sold to two Indian public sector enterprises, ONGC Videsh and Oil India.

According to Indian press reports, Videocon received 2.47 billion dollars from the sale.

The first capital gains tax payment from this transaction occurred in February 2013, and was slightly more than 224 million US dollars.

Chang told STV that the government had “no doubt” what it wanted to do with the three million dollars. “First we want to clear up the debts we have in VAT rebates, which will give greater capacity to companies”, he said. “Secondly, we want to advance in capital expenditure, for those activities which need to be undertaken but don't yet have funding”.

As for the sovereign wealth fund, Chang did not rule setting one up eventually, but said it was not a current priority.

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