MAPUTO, Mozambique’s total public debt stood at 11.64 billion US dollars as at Dec 31, 2015, Prime Minister Carlos Agostinho do Rosario announced here Thursday at a media conference held to explain the country’s current economic situation.

He said the overwhelming majority of the debt, 9.89 billion USD, was foreign debt. The confirmed domestic debt was 1.75 billion USD, while a sum of 233 million USD was still being reconciled.

From the figures released by Rosario it is clear that the foreign debt ballooned enormously under the previous government of President Armando Guebuza. The Guebuza government guaranteed loans taken out by three publicly-owned companies in 2013-2014 amounting to just over two billion USD, or more than 17 per cent of the total foreign debt.

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

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

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 is to provide maintenance and repair services to Proindicus and other companies, so that they do 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 media conference that it is 98 per cent owned by GIPS, one per cent 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 per cent. The first payment is due in May, and that is for just 24 million USD. But over the five-year period, the repayments will be running at an average of 119 million USD a year.

As for MAM, the repayment period is four years at an interest rate of 7.7 per cent. As with Proindicus, the first payment falls due in May but it is for 124 million USD.

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 said.

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,” he said.

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

“It was assumed that by now Anadarko and ENI would be operating,” he said. That would go towards covering the commercial part of the debt. But currently there was no revenue coming in from Anadarko or ENI paying for the services that could be provided by Proindicus and MAM.

One of the aims of MAM is to set up a floating dock to repair vessels at sea. Maleiane believed that other private companies could take a stake in this dock.

He denied that MAM had anything to do with the Logistical Base being set up in Pemba, capital of the northern province of Cabo Delgado, to provide services for the oil and gas industry. MAM was not linked to the public company Ports of Cabo Delgado (PCD), which has the lease on the Pemba base.

Rosario admitted that the information on the Proindicus and MAM debts “should have been shared in good time with the Mozambican people and with the international cooperation partners, including the IMF and the World Bank”.

But “the sensitive moment, characterised by instability, together with the transition from the previous government to the new cycle of governance which began in 2015, meant that we had knowledge and gradual contact with the dossiers on these debts as we went into greater depth about what was already known”.

This is a polite way of claiming that Guebuza’s outgoing government did not inform the new government of the true state of the country’s debts.