IMF prods Mozambique to allow audit of secret loan companies

IMF chief Christine Lagarde on Thursday pressed Mozambique’s President Filipe Nyusi to allow an independent international audit of companies involved in a loan scandal that forced an IMF and World Bank aid cutoff.

Meeting at International Monetary Fund headquarters in Washington, Lagarde told Nyusi the country needed “more decisive efforts to improve transparency” after the government was shown to have hidden off-budget some $1.4 billion in debt, according to IMF spokesman Gerry Rice.

Those efforts would specifically include “an international and independent audit of the companies that were funded under the loans disclosed in April 2016,” according to Rice.

The IMF and World Bank suspended aid to Mozambique in April after news surfaced that the impoverished country had spent $40 million on a new aircraft for the president and had hidden the $1.4 billion in borrowing.

In May, a group of 14 donors including Britain, Canada, the European Union, France and the African Development Bank also cut off aid to Mozambique, which is heavily dependent on foreign support.

The unreported borrowing included financing support for two companies, ProIndicus and Mozambique Asset Management, and bilateral credit from another country.

Mozambique has said that most of the money was to fund maritime security and shipyards.

According to Rice, Nyusi indicated to Lagarde that he would support the audit.

“The managing director welcomed that the president indicated the Government of Mozambique’s willingness to work with the IMF on the terms-of-reference for this process — to be initiated by the office of the attorney general — and to implement it,” he said in a statement.

He said that an IMF staff team would visit the country next week.