Mozambique 15 April: Confusions and clarifications
An earlier version of this newsletter was sent out in error, without the intended subject line or the link to Lusa's article. Our apologies.
Good afternoon. While Frelimo’s top brass remain in an extended session this afternoon to discuss the state of the country’s economy, confusion reigns elsewhere about what is really going on.
Finance minister Adriano Maleiane is not at the Frelimo Central Committee meeting in Matola, but rather at the IMF and World Bank’s Spring Meetings in Washington, DC. Earlier today, he told Portuguese news agency Lusa that there had been “some confusion, that has ended up causing unnecessary noise around Mozambique,” and sought to reassure investors that everything that the state had guaranteed, would remain guaranteed.
His comments fall short of a real clarification, however. He does say that there were two loans, not one; but also that the two loans form part of the total $11 billion public debt that Mozambique had already acknowledged. He goes on to say that there is no reason that the second debt had to be made public: “That was a private loan between the state and the banks.”
If both EMATUM and ProIndicus were already included in Mozambique's public debt, it could mean that the debt sustainability analysis, carried out jointly by the IMF and the World Bank at the end of last year, does not change. If that is the case, then Zitamar’s story yesterday, that World Bank lending to Mozambique is set to stop, would be inaccurate.
According to the World Bank’s rules, it cannot lend to a country whose level of public debt is classified as “high risk”. In December, the IMF and World Bank said the risk was “moderate”, and as yet, a formal reclassification has not been made. A World Bank spokesman told us yesterday: “The DSA risk rating for Mozambique has not been officially revised as yet by the IMF and World Bank. Hence, providing information on operational implications would be premature.”
SEE: World Bank to lead Mozambique funds freeze following ProIndicus scandal
Though the World Bank has not denied that it will stop lending, its country head for Mozambique, Mark Lundell, got in touch to clarify that Zitamar’s report is “certainly not based on any statements made by World Bank staff”, and “is in no way reflective of our working relationships with our client countries.”
A new IMF mission is due to come to Mozambique on 20 April, so we will probably have to wait for their conclusions before we know whether Mozambique is officially reclassified.
Meanwhile, projects are still moving forward. For example, the Islamic Development Bank has promised $200 million in development financing for an electricity transmission project in Zambezia.
SEE: $200m Islamic finance for Mozambique power transmission project
In the Rovuma Basin, Eni is pressing ahead with its plans for offshore and onshore liquefaction, with a tender for a company to help it get the necessary permits. As we report, the Mozambican gas sector could be set for a major shake-up, but in the meantime, Eni and Anadarko must carry on as if nothing else were happening.
SEE: Eni still pushing for Mozambique onshore LNG approval
Away from the troubled economy, the roughly 12,000 Mozambican refugees in Malawi received some good news today with the start of a UNHCR operation to move them to a refugee camp with far better facilities. Unfortunately for the 10,000 at the village of Kapise, they are currently stuck due to heavy rains making the surrounding roads impassable.
SEE: UNHCR starts relocating 10,000 Mozambique refugees in Malawi
Have a great weekend.