Mozambique: Japan freezes $100M in grants and loans

Japan has frozen US$100 million in donations and loans to Mozambique due to the scandal of undisclosed loans by two public companies, the head of Japan’s International Cooperation Agency (JICA) announced in Mozambique, sources say.

Katsuyoshi Sudo, quoted by African Press Agency APA, said the funds will be released after the Mozambican government reaches an agreement with the International Monetary Fund (IMF), which has frozen aid to Mozambique until an audit of the loans is published.

It is further reported that JICA representative also said that economic relations between Japan and Mozambique, where the Japanese annually apply between US$120 million and US$140 million in donations, loans and project financing, will not be affected.

A mission of the International Monetary Fund arrived in Maputo on Monday, where it will remain until 19 July, to analyse with the Mozambican authorities the conclusions of the audit of undeclared loans carried out by Kroll Associates UK.

The IMF considers that the publication of the summary of the audit results is an important step towards transparency regarding the loans taken on by Mozambican tuna company Ematum and undisclosed loans involving public companies Proindicus and Mozambique Asset Management (MAM).

It believes, however, that ‘information gaps persist, in particular regarding the use of loans,’ in the amount of US$2 billion, taken on by public enterprises held by the State Information and Security Services (SISE), which were not disclosed to parliament and international partners in 2013 and 2014.