Mozambican NGO to Challenge Secret Loan

Secret loans taken on by the Mozambican government, that have made raising capital on multi-billion LNG projects in the country more difficult, are being challenged by a non-governmental organisation in the country.

The Mozambique Budget Monitoring Forum has lodged a petition with the country's Constitutional Council challenging the legality of the $850mn secret loan arranged by Credit Suisse to the Mozambican company Ematum. 

The loan was given a government guarantee in 2013, but this was not included in the state budget and therefore not approved by parliament. In 2016, the debt was belatedly brought into the state budget. The petition is challenging the legality of this decision, calling for a review by the constitutional court.

The inclusion of an additional $1.1bn of secret loans arranged by Credit Suisse and Russia's VTB Capital in the state's accounts has been initially approved by Mozambique's parliament but the required legislation is yet to be published. As and when this is made public, the Budget Monitoring Forum intends to lodge a further petition challenging the legality of the government guarantees for those loans as well.

Denise Namburete from the Budget Monitoring Forum said: "The government guarantees for these loans were given in secret without the parliamentary approval required by law and the constitution. Ordinary Mozambicans should not have to repay one dollar of these loans."

A summary of an independent audit into the loans was released June 24. Mozambican civil society organisations called for the full audit to be made public. The government has been criticised by both the IMF and World Bank for hiding debts off-balance sheet. 

A final investment decision in the $8bn Coral floating liquefaction (FLNG) project offshore Mozambique was taken July 1 by Eni and partners. However that go-ahead was heavily reliant on less risk-averse Chinese banks providing debt financing, whereas a bigger lending pool will be required for larger, multi-phase, multi ton/yr onshore LNG export projects planned for development in the 2020s by ExxonMobil with Eni, as well separately by Anadarko.

Sarah-Jayne Clifton, director of the UK-based Jubilee Debt Campaign said: "None of the costs of these odious debts should fall on the shoulders of ordinary people in Mozambique. Both the government officials involved and the lenders must be held to account for their actions. And the UK parliament needs to act to ensure that a scandal like this, involving London-based banks and loans issued under UK law, can never happen again."

Mark Smedley