27 April 2017

Mozambique: Assembly Approves General State Account

Maputo — The Mozambican parliament, the Assembly of the Republic, on Wednesday approved the General State Account (CGE) for the 2015 financial year, which had been bitterly debated earlier in the month.

Only deputies of the ruling Frelimo Party voted in favour of the CGE. The Mozambique Democratic Movement (MDM) voted against, while the rebel movement Renamo did not vote at all. As soon as the Assembly moved on to this item, all Renamo deputies left the chamber.

The opposition to the CGE from Renamo and the MDM is largely because the account mentions the illicit guarantees given by the previous government, headed by President Armando Guebuza, to loans of over 1.1 billion US dollars to the two security related companies Proindicus and MAM (Mozambique Asset Management).

The opposition parties claimed that even mentioning the illicit loans and guarantees in the CGE somehow “legalized” them, and will oblige all Mozambicans to pay them. But the CGE is just a set of accounts: it states what exists and not whether or not it ought to exist.

Furthermore a Commission of Inquiry set up by the Assembly last year has already concluded that the guarantees were both illegal (because they violated the budget law) and unconstitutional (because only the Assembly can authorise such debts, and it was not even consulted),

At the moment there is no chance that Mozambique will pay these debts, regardless of the guarantees. As the Minister of Economy and Finance, Adriano Maleiane, warned creditors at a meeting in London last October, the government simply does not have the money to service these debts.

So far the government has missed three repayment deadlines, for the MAM and Proindicus loans, and for interest on the bonds issue by a closely connected third company, Ematum (Mozambique Tuna Company).

And, far from promising to honour the debts, during the debate on the CGE in mid-April, Prime Minister Carlos Agostinho do Rosario said the government will only honour debts if it is proved that the money “has been used for purposes that are in the public interest”.

Since it may well prove very difficult to show that the over two billion dollars lent to Ematum, Proindicus and MAM were used in the public interest, this sounds like a polite notice that Mozambique is considering a generalized default on these loans.

Rosario did not believe that mentioning the loans and guarantees in the CGE committed the government to anything. He told the Assembly that the inclusion of information on the two guarantees in the CGE for 2015 “was necessary to guarantee control and monitoring of the guarantees by the Administrative Tribunal (the body that verifies the legality of public expenditure), in accordance with the law that set up the State Financial Administration System (Sistafe)”.

Control of the guarantees by the Tribunal, he stressed, “does not replace or hinder the independent audit that is currently under way”.

This did not satisfy Renamo or the MDM, who continued to insist that all reference to the guarantees should be excised from the CGE.


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