Mozambique: Maleiane Justifies Paying Ex-Ematum Bondholders

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U.S. dollars.

Maputo — Mozambique's Minister of Economy and Finance, Adriano Maleiane, claimed on Friday that the government is doing all in its power to restore the business environment and regain the trust of local and foreign investors.

He was speaking to reporters about the efforts undertaken to restore the country's good name after the discovery in early 2016 of the scandal of the country's "hidden debts".

This term refers to the more than two billion US dollars' worth of loans obtained by three fraudulent companies, Ematum (Mozambican Tuna Company), Proindicus and MAM (Mozambique Asset Management) from the banks Credit Suisse and VTB of Russia on the basis of illegal loan guarantees issued by the previous government under President Armando Guebuza.

The greater part of these guaranteed loans were kept secret until April 2016. When they became public knowledge, the International Monetary Fund (IMF) suspended its programme with Mozambique, accusing the government of concealing the true macro-economic situation. The 14 donors who had provided direct support to the Mozambican state budget suspended disbursement, and this form of aid has not resumed to this day.

"We must recognise that we have had episodes that were not good, and we are solving them in a responsible way so that Mozambique may have a good name and attract investment in various areas", said Maleiane.

"As individuals or as public servants we may make mistakes", he continued. "But we have to find the best options so that the State is not classified as a failed state, which has no rules. It's good to clarify now that all of us, including the press and civil society, are working for the State".

Maleiane claimed that Mozambique is known as "a good payer" with "recognised merit". The government was in discussions with many investors, and "we have to do everything so that the State is not damaged".

He urged the public to "trust the government", because "we are doing everything to prevent damage to the State, so that all of us emerge as winners".

Maleiane's special pleading was to justify the government's dealings with the holders of the bonds that were once issued by Ematum, but were converted into government sovereign bonds in 2016. The government has continued negotiating with the bondholders despite the ruling by the country's highest court, the Constitutional Council, that the Ematum loan and guarantee are unconstitutional and illegal.

The government has already paid 38 million dollars to the bondholders, as a fee for their consent to the terms of repaying the entire debt which the government proposed at the end of May. Maleiane claimed this payment was not an affront to the Constitutional Council.

But in fact, the Council's ruling, of 3 June, is very clear. It declared the Ematum loan and guarantee null and void "with all the legal consequences".

The government, the Constitutional Council said in its ruling, had "completely disrespected" both the Constitution and the law by contracting the Ematum debt. There can be no appeal against Constitutional Council rulings which are irrevocable.

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