No Accountability For Mozambique's 27 Billion Rand Government Theft

No secret debt payments next year - or any time soon

No payments on the $2 bn commercial secret debt are included in the 2018 state budget, Prime Minister Carlos Agostinho do Rosário told parliament Wednesday. And he said that there will be no payments until negotiations with creditors are concluded and the Attorney General's office has completed its actions related to the debt. This could be a several years away, which means no debt payments any time soon. (O Pais, Zitamar 30 Nov; @Verdade 24 Nov; Savana 1 Dec)

Comment: The past two weeks have reinforced the view that all parties - creditors and government - are acting in ways that suggest they want the debt issue deferred, to be dealt with by the new government in 2020. The Ematum bond holders continue to demand to be treated preferentially over the MAM and ProIndicus syndicated loan holders. Government has rejected this demand, and knowing this, bondholders seem to be intentionally delaying negotiations. Similarly, Finance Minister Adriano Maleiane pointed out to a parliamentary budget commission on 20 November that "we are lucky" that the syndicated loan holders had done nothing to go to court to try to enforce guarantees (which Mozambique says are invalid). In effect, Maleiane was saying that there would be no payments until the creditors force action.

Why are creditors so willing to delay? In part, they feel they will get a better deal in the early 2020s when the government will be under less pressure and the gas is coming on line. Also, creditors and bondholders can keep these loans as assets on their books at near to their face value - probably higher than any renegotiated value. Better to let sleeping dogs lie.

Finally there is the issue of misconduct by the lenders, and the longer the delay, the more likely that will be forgotten. Credit Suisse has significant responsibility because it organised the $2 bn credit and has been accused of misleading lenders and facilitating corruption, and is being investigated by criminal and financial authorities in the US, UK, and Switzerland - but this is just part of broader misconduct which has made the bank unprofitable. Credit Suisse boss Tidjane Thiam on 30 November promised shareholders that he is cleaning up the bank and that it will be profitable for 2019. He will hope investigations drag on for years and he does not want to deal with Mozambique any time in the near future. Syndicated loan holders would need to bring legal action against Mozambique in London, and following a High Court decision on Ukraine debt, there is a strong chance they could lose - so they are in no hurry. And of course the Mozambique government always prefers the do-nothing option. So expect lots of words but no payments or negotiation for at least two years.

SOURCE: J. Hanlon

SEE ALSO : Following the donor-designed path to Mozambique's $2.2 billion secret debt deal by Joseph Hanlon