Mozambique attorney-general probes undeclared sovereign borrowing


Mozambique’s attorney-general will seek international help to investigate as much as $1.35 billion of undeclared sovereign borrowing that may have tipped the country into unsustainable debt, the state news agency AIM said on Friday.

The $1.35 billion, in the form of loans to state-owned enterprises, is in top of an $850 million “tuna bond” issued in 2013 that had to be restructured earlier this year because the southern African state was struggling to meet repayments.
“The Attorney-General’s Office will request the appointment of national and international experts with profound expertise in these issues so that we can obtain relevant and reliable information,” AIM quoted Attorney-General Taibo Mucobora as saying.

The International Monetary Fund cancelled a planned trip to Mozambique in April, saying that it believed Maputo had hidden borrowing for its defence sector from Credit Suisse and Russia VTB Bank.

The IMF, which last year agreed to loan Mozambique $286 million to help cushion its economy following deep declines in commodity prices, said the undeclared loans had changed its assessment of Mozambique’s macroeconomic outlook.

In May, a Finance Ministry source said Mozambique was heading towards default after the government failed to honour a sovereign guarantee behind a $535 million loan taken out by a state-run company to build shipyards that have not materialised.

The repayment crisis in a country once seen as having among the brightest economic potential in Africa may trigger a reappraisal of commercial lending to African governments during the past decade of relatively strong regional growth.