Budget support donors, the World Bank and Japan have all said recently that the
Kroll forensic audit of the $2 bn secret debt was insufficient to allow a
resumption of direct funding to the government. This suggests the squeeze on
government spending will continue for at least another year, which could have an
impact on municipal elections in October 2018. The government is already
surviving by not paying its bills and through domestic borrowing, and the World
Bank in its Mozambique Economic Update issued earlier this month noted
that government was recently unable to sell bonds even at an interest rate of
28.3%.
The World Bank has been one of the biggest providers of budget
support and in March Bank country representative Mark Lundell said he hoped
budget support could be resumed this year. But on 24 July Bank Executive
Director Andrew Bvumbe dashed any such hopes. On a visit to Maputo he stressed
that budget support could not be resumed without a restructuring of the debt,
including the $2 bn secret debt, and agreement on an IMF programme, which in
turn requires filling the information gaps left by Kroll. (Savana 28
July, Lusa 25 July)
"The auditors were however denied full cooperation
from all institutions (national and international)" noted a report accepted last
week by the Group of 14 (G14) budget support donors. "Despite being refused
essential information, the summary suggests major misconduct from national and
international parties." The G14 demanded "publication of the full report and
additional information to fill the major gaps", as well as "accountability" and
fiscal and governance reforms. (Savana 28 July) So no budget support
soon.
Japan has cut off all new lending to Mozambique, Yamashita
Chigiru, the representative of the Japanese International Cooperation Agency
(JICA), told O Pais (20 July) in Tokyo. He said it was necessary not only
to clarity the secret debts, but to ensure that such a situation cannot be
repeated; until then, "it is not appropriate to give loans to
Mozambique."
Although the World Bank continues to approve new projects
not involving direct funding of the government budget, Japan has stopped all new
lending although it will continue with projects already under way.
In a
statement 24 July Minister of Economy and Finance, Adriano Maleiane, accepted
that there would be no IMF programme this year, but said there was the
possibility of a program in 2018.
(O Pais 25 July)
Joseph Hanlon
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