Mozambique says confusion led to IMF “hidden debt” accusation

Mozambique has no hidden loans and accusations by the International Monetary Fund (IMF) that it had borrowed $1 billion more than previously disclosed were the result of of confusion, the country’s finance minister has said.

The IMF cancelled a planned trip to Mozambique this week after announcing on Friday that it believed the southern African country had concealed borrowing for its defence sector from Credit Suisse and Russia VTB Bank.

The IMF, which last year agreed to loan Mozambique $286 million to help cushion its economy following deep declines in commodity prices, said the undeclared loans had changed its assessment of Mozambique’s macroeconomic outlook.

Finance Minister Adriano Maleiane was quoted by the state news agency on Sunday saying the country had no hidden loans.

“There was some confusion which has ended up creating problems for Mozambique groundlessly,” he said.

“The international community will realize that, firstly, Mozambique is a country that has never failed to pay, and secondly … we honour our commitments,” he added.

The IMF’s allegations will likely damage Mozambique’s efforts to rebuild its reputation after a $850 million bond launched in 2012 to start state tuna-fishing company Ematum was found to be mostly for defence spending.

Bond holders have since accepted a deal by the Mozambique government to swap the debt for sovereign notes.

Mozambique is close to agreeing deals that would unlock huge offshore gas reserves and could transform one of the world’s poorest countries into a major gas exporter and a promising frontier investment hub.