No concessions to donors -
Mozambicans are 'resilient' and can go it alone

Mogherini meets Filipe Nyusi, President of Mozambique

Mogherini meets Filipe Nyusi, President of Mozambique

Image by European External Action Service

Both were open that the economic crisis was caused by the sudden cut in budget support and aid directly to the government in April 2016, when the IMF and donors discovered $2 bn in secret debt. An audit by Kroll could not account for more than half the money, and it is assumed some of it went into the pockets of senior Frelimo figures. IMF and donors have said that direct aid will not be restored until Mozambique says what it did with the money, which, in year-end statements, it steadfastly declined to do.

In his state of the nation speech to parliament on 20 December, Nyusi said that the debts "contracted by the companies Proindicus, MAM and Ematum but authorised by the government in 2013" were not included in information given to the International Monetary Fund. As a result, the "IMF and international budget support partners have suspended, since 2016, financing of the state budget". In response, the government gave more information to parliament and the IMF and initiated the Kroll audit. It also made budget cuts, increased tax collection, increased borrowing, and improved management. These all show how "resilient" the people are, Nyusi said.

"The Government has adopted economic measures with a view, on the one hand, to stabilize the economy, and on the other, to restore the confidence of the partners. These are essential steps for the resumption of direct budget support," Nyusi told parliament. The message was clear: the President expects donors to end their strike in response to better economic management and because the country has shown it can survive without direct aid, but without additional concessions on information on the secret debt.

"Even with the adversities that the country has faced, the national economy shows positive signs. … Because we are a resilient people, we can, with all pride and without fear, affirm that the State of the Nation is challenging but encouraging," he concluded.

The hidden debts were 'authorized' and 'guaranteed' by the state, Nyusi told parliament. "The Government has been following the process of restructuring the business plans of the companies benefiting from the state guarantees so that they can resume the fulfilment of the commitments assumed." And the Administrative Tribunal report issued in November refers to "loans taken out with guarantees".

The full state of the nation speech (in Portuguese) is on:

Zandamela: return to normal limited
by aid cuts due to hidden debt

In 2017 "there was a gradual return to the normality of the economic and financial indicators, which had deteriorated substantially in the previous year," Bank of Mozambique Governor Rogerio Zandamela said in his end of year statement on 18 December. But the crisis is not over. "Government revenue remains below that required to finance expenditures, because of the suspension of direct support to the budget by donors and cooperation partners, which poses an additional challenge to the fiscal sector."

Zandamela highlighted that inflation peaked at 27% in 2016 but has fallen to 7%; devaluation reached $1 = MT 80 but the Metical has recovered to $1 = MT 60; and reserves which fell to less than 3 months of imports are now at 7 months, due in part to the payment of $352 mn in capital gains tax by ENI relating to the sale of part of its gas field.


News reports & clippings
7 January 2018

Editor: Joseph Hanlon (
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