The International Monetary Fund (IMF) has made it clear that there will be no IMF loans for Mozambique until the country’s debt load is sustainable

IMF Spokesperson Gerry Rice, at his weekly press briefing in Washington last Thursday, confirmed what the Mozambican Finance Ministry itself had said in its briefing to creditors in London two days earlier, that there can be no new IMF programme as long as Mozambique is “debt distressed”.

“In line with Fund policies, we cannot disburse funds in a situation where we think the debt is not sustainable,” said Rice. “As with any country, to be able to disburse we need to know that the debt is sustainable.”

The IMF suspended its programme with Mozambique in April, after the discovery that the previous government, under President Armando Guebuza, had not disclosed over a billion US dollars worth of government guaranteed loans to the security sector-related companies, Proindicus and MAM (Mozambique Asset Management).

There are two basic conditions for the resumption of normal relations between the IMF and Mozambique — a return to debt sustainability and an independent, international audit of Proindicus, MAM and Ematum (Mozambique Tuna Company). Between them, the debts of these three quasi-public companies amount to more than two billion USD.

Rice said the IMF “welcomed Mozambique’s willingness to perform the audit, and it was agreed that this audit would be conducted in an independent way by a reputable international auditing company”.

“My understanding is that work on this has continued, that in fact we expect the terms of reference for this audit to be completed soon. We would see this as an important step to our continued support for Mozambique,” Rice said.