April 17, 2018 / 1:07 PM / a year ago

UPDATE 1-Mozambique state accountable for debt but responsibility must be shared-president

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By Karin Strohecker

LONDON, April 17 (Reuters) - Mozambique will assume responsibility for debt incurred by previous administrations, but there needs to be a shared responsibility by those providing the loans, President Filipe Nyusi said on Tuesday.

Heavily indebted Mozambique got cut off from multilateral and foreign donors such as the International Monetary Fund after the government admitted to $1.4 billion of previously undisclosed loans in 2016.

Shortly afterwards, Mozambique announced its debt burden had become unsustainable, but progress in restructuring has been slow and Maputo only presented a plan to overhaul its debt burden to its commercial creditors in March.

“We are holding a dialogue with creditors and we are looking at what should be done. Naturally this is a complex process,” said Nyusi, speaking through a translator at international think-tank Chatham House in London.

“It is a complex process because it is not only Mozambique to be seen as a culprit... This loan was from a certain place, they were not aware we are just giving this, due diligence should have been done, so this is a responsibility that should be shared,” he added, not specifying which part of the debt he was referring to.

The debt earmarked for restructuring includes a eurobond, which has some $726 million outstanding, as well as the hidden loans, of which much was spent on building a state tuna-fishing company and upgrading maritime and military security.

The debt has also been subject to a forensic audit released last summer, but the report could not account for all the proceeds.

Eurobond holders have dug in their heels, demanding those holding the hidden loans arranged by Swiss lender Credit Suisse and Russia’s VTB ought to be first in line to take some pain.

However, there can be no question of not assuming responsibility for debt arranged by previous governments, Nyusi added.

“One thing is certain... The state has to be accountable for debts, we should not just abandon,” said Nyusi, who was in London to attend a meeting of Commonwealth Heads of Government.

“Otherwise, if we do not assume these debts of previous administrations, we will be seen as a country that is not serious.”

Nyusi confirmed that Mozambique’s finance minister and other policy makers were currently in Washington to meet IMF officials and creditors on the sidelines of the IMF/World Bank annual meeting. (Reporting by Karin Strohecker; editing by Sujata Rao and Gareth Jones)

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