The Mozambican government is working to restore the trust of the International Monetary Fund (IMF), and of the country’s other international partners, following the crisis sparked by the discovery of loans worth more than a billion US dollars guaranteed by the government which were not earlier disclosed, says Prime Minister Carlos Agostinho dos Rosario.

The loans, from the banks Credit Suisse of Switzerland and VTB of Russia, were contracted by the quasi-public companies Proinducus and Mozambique Asset Management (MAM) in 2013-14, and were guaranteed by the previous government, headed by President Armando Guebuza.

The government guarantees for these loans, plus the bond issue of 850 million USD for the Mozambique Tuna Company (EMATUM), which was already in the public domain, added 20 per cent to the country’s foreign debt.

When the Proindicus and MAM loans became public in April this year, the IMF reacted by suspending the second instalment of a loan under its Standby Credit Facility (SCF). The World Bank and the 13 other aid donors and funding agencies which provide direct support to the Mozambican State Budget suspended all further disbursements.

According to a report in Monday’s issue of the independent news-sheet Mediafax, Rosario told his a dialogue session with businesses in northern Niassa Province that an IMF mission would visit Mozambique in September or October.

“We have agreed steps to be taken to re-establish trust and the indications we have is that everything is in hand to achieve this. When the IMF mission arrives, it will discuss the next steps with the government.” he added.

An IMF mission was in Maputo in June, and insisted that there should be an international audit to ascertain exactly what had happened to all the money lent to Ematum, Proindicus and MAM. So far there is no sign of such an audit, although the Mozambican Attorney-General’s Office has announced that the three loans are under investigation.

The Niassa businesses called on the government to establish a “Special Economic Zone” (ZEE) for the province, in order to attract investment and stimulate the development of Niassa. Rosario assured his audience that the government was working to complete the rebuilding of the branch railway that connects Lichinga to the northern rail corridor running from the port of Nacala to Malawi. Once the railway is operational, the transport costs for goods going to and from Lichinga should drop sharply.