Mozambique public debt now $12bn

02 May, 2016 - 00:05 0 Views
Mozambique public debt now $12bn

The Herald

MAPUTO. -Mozambique’s total public debt stood at $11,64 billion, as of December 31 2015, Prime Minister Carlos Agostinho do Rosario announced on Thursday.

Speaking at a Maputo press conference called to explain the country’s current economic situation, he said that the overwhelming majority of the debt, $9,89 billion, was foreign debt.

The confirmed domestic debt was $1,75 billion, while a sum of $233 million was still being reconciled.

From the figures released by Rosario it is clear that the foreign debt ballooned enormously under the previous government, led by President Armando Guebuza.

The Guebuza government guaranteed loans taken out by three publicly-owned companies in 2013-2014 amounting to just over two billion dollars. That is over 17 percent of the total foreign debt.

Of these three companies, the only one known to the Mozambican public, or to the International Monetary Fund (IMF), prior to this month was the Mozambique Tuna Company (EMATUM), which issued bonds for $850 million in 2013, fully guaranteed by the government.

The two large undisclosed loans were to companies called Proindicus ($622 million) and Mozambique Assets Management ($535 million).

Rosario said that the purpose of Proindicus “is to provide security services to hydrocarbon companies, to protect maritime traffic and vessels and to provide search and rescue services in Mozambican territorial waters”.

As for Mozambique Assets Management (MAM), its purpose was to provide maintenance and repair services to Proindicus and other companies, so that they did not send foreign currency out of the country in order to purchase these services.

Proindicus is owned by the same three public concerns that own EMATUM – the Institute for the Management of State Holdings (IGEPE), the public fishing company Emopesca, and GIPS (Investments, Holdings and Services Management).

Although the latter is a limited company, it is mostly owned by the social services of the State Intelligence and Security Agency (SISE).

As for MAM, Finance Minister Adriano Maleiane told the press conference that it is 98 percent owned by GIPS, one percent by EMATUM and one per cent by Proindicus.

Maleiane said that the Proindicus loan is to be repaid in the next five years at an interest rate of 3,75 percent.

The first payment is due in May, and that is for just $24 million. But over the five year period, the repayments will be running at an average of $119 million a year.

As for MAM, the repayment period is four years at an interest rate of 7,7 percent. As with Proindicus, the first payment falls due in May.

But it is for $124 million.

Maleiane said MAM “is looking for a solution for the first payment”. It was “trying to find the resources”. But if it failed, then the state would have to pay.

“The State has issued guarantees and these are to be honoured if the companies cannot honour their payments,” he admitted.

Rosario divided these debts into public and commercial components.

“We want to make it clear that the State will pay the public interest part of the debts, while the commercial component must be paid by the respective companies.”

Proindicus and MAM are supposed to run at a profit by selling their services to oil and gas companies and other maritime enterprises – this had not happened so far, Rosario said, because it had taken longer than expected for the main hydrocarbon prospection companies, the American Anadarko and ENI of Italy, to reach their final investment decisions. – AMA.

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