Campaigners in Mozambique call for non-payment of hidden debts

A group of 26 organisations in Mozambique have asserted that the $1.86 billion of the country’s debts at the centre of a growing international controversy were contracted illegally and should not be paid.

Photo: mattbuck/Wikimedia
Photo: mattbuck/Wikimedia

The campaigners make the claim about three state backed debts owed by MAM ($535 million), ProIndicus ($597 million) and Ematum ($726.5 million). The ProIndicus debt comes from loans from Credit Suisse and VTB Bank, MAM loans from VTB and Ematum a Eurobond.

Under the Mozambique constitution all loans and guarantees of longer than a year have to be approved by the Assembly of the Republic, the parliament. This did not happen with any of these three debts. Furthermore, the ProIndicus and MAM debts exceeded limits set by the 2013 Budget Law and were not entered into the State Budget for that year. The Ematum debt was only entered in the State Budget in 2015, despite it being contracted in 2013.

All of the debts are believed to have been contracted under English law, through the London-based offices of Credit Suisse and VTB Bank. It has been reported that the UK’s Financial Conduct Authority is investigating whether Credit Suisse and VTB broke disclosure rules by failing to reveal the ProIndicus and MAM debts.

Paula Monjane from the Fórum de Monitoria do Orçamento (Civil Society Budget Monitoring Forum) said:

“The officials who broke the law in Mozambique need to be held accountable by the Administrative Court and the Central Office for Combating Corruption. This includes the lenders and financial institutions which facilitated these loans. In defence of the common good and against the continued impoverishment of the Mozambican people, we do not want, do not accept and will not pay the debts of EMATUM, ProIndicus and MAM.”

The full statement of the 26 civil society organisations integrating the Budget Monitoring Forum (FMO), Mozambique Debt Group (GMD) and Transparency and Fiscal Justice Coalition (CTJF) is available here.

Sarah-Jayne Clifton, Director of the Jubilee Debt Campaign in the UK said:

“This is yet another example of private lenders and governments hiding new loans from public and parliamentary scrutiny. Lenders and borrowers are both responsible for ensuring that loans are contracted legally and democratically and invested productively so that they don’t saddle populations with unjust and unpayable debts. Yet time and again we are seeing irresponsible lenders being bailed out and the populations of countries paying the price. This should not be the case in Mozambique. Credit Suisse and VTB should pay the price for these illegitimate loans, and should not be bailed out by the IMF or anyone else.

“The UK’s major role in the broken global debt system also needs to be addressed. The UK government should consider new legislation to ensure that all public and publicly-guaranteed loans issued under English law are disclosed to the people of the country concerned.”

The revelations about the debts have led to the IMF and World Bank suspending loans which were being used to make debt payments. A $178 million debt and interest payment owed by MAM has been defaulted on by the company with VTB currently trying to recover the money from the Mozambique government.

It is believed that part of the MAM, ProIndicus and Ematum loans were used to buy military equipment, particularly interceptor boats and accompanying infrastructure. Campaigners in Mozambique are calling for a forensic audit to find out exactly how much was spent, and also where the rest of the money went.

In July 2015 Jubilee Debt Campaign listed Mozambique as one of nine low and lower middle income countries most at risk of a debt crisis.

The 26 organisations from Mozambique are: Centre for Civil Society Learning and Capacity-Building (CESC); Mozambican Debt Group (GMD); N’weti – Communication for Health; Centre for Public Integrity (CIP); Community Development Foundation (FDC); ActionAid Mozambique (AAMoz); Rural Observatory (OMR); Mozambique NGO’s League (JOINT); Civil Society Forum for Children’s Rights (ROSC); Community Radios Forum (FORCOM); Helvetas Swiss Intercooperation; Muleide – Women, Law and Development; Mozambican Civil Society Platform for Social Protection (PSCM-PS); WLSA – Women and Law in Southern Africa; Associação Progresso; Kulima; TEA; Fórum Mulher; Rede Activa; Rural Women’s Association; Mozambique Workers Organization (OTM – Trade Union); CENTME; SENTIHOT; SINECE; The Oppressed Theatre Group; Open Society (OS); The Christian Council of Mozambique (Branches of Maputo, Gaza, Inhambane and Cabo Delgado); Association for Women Empowerment and Development; The Basic Education Development Unit – Laboratory.

Clause p) of paragraph 2 of article 179 of the Constitution of the Republic of Mozambique says it is the exclusive competence of the Assembly of the Republic to “authorize the Government, defining the general conditions, to contract or grant loans, perform other credit operations, for a period longer than a fiscal year and to set the maximum limit of guarantees to be granted by the State”.

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