IMF Suspends Standby Credit Facility for Mozambique

MAPUTO, Mozambique, Capital Markets in Africa — The International Monetary Fund (IMF) has confirmed the suspension of the second tranche of a loan to Mozambique of US$283 million from the Fund’s Standby Credit Facility (SCF).

The suspension had been widely expected after the IMF announced last Friday that it was cancelling the mission which had been due to visit Mozambique this week because of the country’s “undisclosed loans”, which the IMF put at more than a billion US dollars.

The SCF is a means of providing financial assistance to low income countries with short term balance of payments problems. In late October 2015, Mozambique applied for a loan of 204.5 million Special Drawing Rights (equivalent to about US$282.9 million) from the SCF. The IMF governing board granted the request and the first instalment (about US$118.9 million) became available in December.

A source in the IMF office in Maputo told local media last week that all loans to Mozambique had been suspended until there was a full explanation of the massive debts which the previous government, under President Armando Guebuza, is alleged to have run up, and of which the IMF was never informed.

At a Washington media conference on Friday, the director of the IMF’s Africa department, Antionette Sayeh, said the IMF “received confirmation this week from the authorities of the existence of a large amount of borrowing that had not previously been disclosed to the IMF”.

“The undisclosed borrowing exceeds one billion US dollars and significantly changes our assessment of Mozambique’s macroeconomic outlook. We are currently ascertaining in cooperation with the authorities the facts regarding this borrowing,” she added.