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World Bank halts disbursements in Mozambique over hidden debt

Washington, United States | April 28, 2016, Thursday @ 08:29 in World » AFRICA | By: AFP | Views: 3177
World Bank halts disbursements in Mozambique over hidden debt

Fishing Boats from "Ematum" and 8 speedboats, belonging to Mozambican state company "Proindicus" are seen on a quay at the Maputo Harbour in Maputo, on April 22, 2016. On April 26, 2016, Mozambique said most of 1,4 billion USD in previously hidden loans had been used to fund maritime security and shipyards, a week after the IMF suspended the country over the undisclosed sum.(STRINGER / AFP)

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(AFP) - The World Bank is putting a hold on new development support for Mozambique after the government was shown to have hidden off-budget some $1.4 billion in debt.

After the International Monetary Fund suspended aid to Mozambique earlier this month after discovering the hidden debt problem, the World Bank confirmed Wednesday it was putting new allocations of budget support on hold while they review the country's finances.

The Bank told AFP that "further approvals of development policy loans are delayed" while it and the IMF do an assessment of the country's macroeconomic stability and conduct a debt sustainability analysis (DSA).

"Following the DSA, a decision will be made on the volume of World Bank support to Mozambique."

The move affects $40 million in direct budget support scheduled during this calendar year.

The Bank noted that it continues to process certain investment lending for Mozambique, one of the 10 poorest countries in the world.

On Tuesday, Mozambique said most of the $1.4 billion in previously hidden borrowing had been used to fund maritime security and shipyards.

The government guaranteed a $622 million loan taken out by the state-controlled company ProIndicus in 2013 and another loan of $535 million to Mozambique Asset Management in 2014, government spokesman Mouzinho Saide said.

ProIndicus was created in 2012, primarily to protect areas where offshore gas is drilled, as well as to fight piracy, illegal immigration, drug trafficking and illegal fishing.

Mozambique Asset Management supports two shipyards providing maintenance services to public and private vessels.

Saide also said that Mozambique had received "bilateral credit" of $221.4 million from an unnamed country in 2009.

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Tags: IMF, Mozambique, WorldBank, aid, budget, economy

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