Mozambique News Agency

No.160, 22nd June 1999


Improved HIPC debt relief may cause delays

Debt relief to Mozambique may be delayed following a decision by creditor nations to consider more favourable arrangements. The boards of the IMF and World Bank declared Mozambique eligible for the HIPC (Heavily Indebted Poor Countries) debt relief initiative back in April 1998. But the country had to wait for 15 months for the "completion point", the moment when almost three billion dollars (in nominal terms) of Mozambique's debt is to be cancelled.

With Mozambican compliance with its structural adjustment programme with the IMF, the debt relief should have taken effect at the end of June. But that promise may now be broken, since the World Bank and IMF meetings to discuss the Mozambican case, originally scheduled for the end of June, has been postponed.

The independent newspaper Metical has suggested two reasons for the postponement. One is problems with Russia over exactly how much of the old debt that Mozambique ran up to the Soviet Union is being cancelled.

But a deeper reason for the postponement is that the Bank and the IMF must now take into account changes to the HIPC scheme itself that were discussed in Cologne on 12 June at the meeting of the finance ministers of the G-7 group of industrialised countries.

The ministers agreed to change a key figure for "debt sustainability". Previously creditors had regarded a nation's foreign debt as "sustainable" if the debt-stock-to-exports ratio was in the region of 200 per cent. The G-7 ministers dropped this to 150 per cent. In Mozambique's case, this will mean a further reduction in the debt stock, and hence a reduction in annual debt servicing.

Furthermore, to work out the debt-stock-to-exports ratio, the G-7 ministers said that only the real export revenue at the moment of taking this decision should be considered, and not the artificially inflated export revenue figures produced by the IMF.

Metical estimates this will mean a 25 per cent reduction in debt repayments. Before the G-7 proposal the calculation was that Mozambique would be paying an average of 100 million dollars a year in debt servicing in the first three post-HIPC years (compared with an average of 113 million dollars a year in the last three pre-HIPC years).

With the G-7 proposal, the amount should fall to an average of about 75 million dollars a year. Metical points out that, despite the reduction, Mozambique will still be spending more on servicing its debts than on its education and health services.

The position taken by the Mozambican government and by the country's parliament, the Assembly of the Republic, is to push for 100 per cent debt cancellation.

Some of the G-7 members, notably Britain, want to go further than just tinkering around with the debt-stock-to-exports-ratio. They would like to alter the very definition of "debt sustainability". The IMF and the World Bank view this in cold financial terms - for then a debt is sustainable if a country can go on paying it. From this point of view, debt relief is just a way of stopping countries from defaulting.

But some of the G-7 want a political definition - they want "debt sustainability" to take into account the debtor countries' development needs, and intend to argue this position at IMF and World Bank meetings in October. If they are successful, Mozambique can expect a further decline in its debt service payments.

Conditions do not exist for immigrant registration

The Electoral Administration of Technical Secretariat (STAE), the electoral branch of the civil service, has announced that there are no conditions for the electoral registration of Mozambicans living abroad due to lack of time and financial resources.

This would mean that Mozambican immigrants would not be able to vote in the forthcoming general elections, much like in the first elections in 1994.

STAE's Director General, Antonio Carrasco, said that the decision on whether immigrants could be registered would be taken by the National Elections Commission (CNE), in concordance with the Electoral Law.

Voter registration is scheduled to start on 20 July, running to 17 September.

Frelimo condemns Renamo incitement

The ruling Frelimo party has strongly condemned incitements to violence and disorder by leaders of Renamo.

On 12 June Renamo general secretary Joao Alexandre urged Renamo supporters in the central district of Chibabava to beat up the local administrator, and at the same event a Renamo parliamentary deputy, Rui de Sousa, beat up a Frelimo member who was accused of ripping up Renamo propaganda. At a Maputo press conference a few days later Renamo president, Afonso Dhlakama, threatened to render ungovernable the five provinces where Renamo topped the poll in the 1994 general election.

Interviewed the Maputo daily Noticias, Bernardo Cherinda, the Frelimo Central Committee Secretary for Mobilisation and Propaganda, said that "Renamo feels lost when it is not inciting people to violence, to disorder and disobedience. This is the normal state of this party. We had already noted that the origin of this party is terrorism, and that is evident today".

Asked what Frelimo thinks should be done, in response to this behaviour, Cherinda pointed out that there are laws applicable in such cases.

Mozal hire more Mozambican companies

Contracts for Mozambican companies involved in the construction of the Mozal aluminium smelter on the outskirts of Maputo have risen over the last six months to $47 million, according to Antonio Macamo, of the government's Investment Promotion Centre (CPI). This, however, remains a very small percentage of the total $1.3 billion that will be invested in the smelter.

When Mozal starts operating, by the year 2000, it will make available about 77 contracts for suppliers worth about $100 million a year, said Macamo.

These packages should be easily accessible to Mozambican companies, and the CPI is encouraging them to be prepared.

New school curriculum to be drafted

Education Minister Arnaldo Nhavoto said in Maputo on 17 June that the drafting of the new curriculum for basic education "should be the task of all of society". He said revising the curriculum is an important issue because it will allow pupils to be fully prepared to face "the growing challenges of building a democratic society".

Speaking during the opening of a meeting of the committee in charge of drafting the new curriculum for basic education, Nhavoto said that his ministry is a mere "interpreter" of the intentions and expectations of society.

During the two day meeting, the committee will analyse the various contributions to the new curriculum suggested by parents, teachers and other members of society.

New fisheries inspection and quality rules

A new set of regulations on fisheries inspection and quality control took effect in Mozambique on 17 June, in compliance with demands of the international market, particularly the European Union, which accounts for 60 percent of the exports of Mozambique's fisheries produce.

The National Director of Fisheries, Herminio Tembe, said that the new regulations, approved three months ago by the government, were harmonised with the European Union's requirements.

Tembe said there was a delay before putting the new regulations into operation in order to give fishing companies time to prepare for implementation.

Mozambique was also obliged to make a series of investments, for instance in laboratories equipped up to international standards, in order to guarantee quality control.

Under the regulations, fishing companies must meet a series of hygiene and health requirements, without which they cannot legally export their produce to the markets of the European Union.

A team of EU fisheries experts visited Mozambique in December and January to check on Mozambique's quality control mechanisms. "At that time, we didn't have these regulations in force, and so we had to convince the European auditors that they would come into effect very shortly", said Tembe

Mozambique received the final report from the European mission in April. It gave a clean bill of health to Mozambican vessels with on-board freezing facilities, but expressed reservations about the onshore processing facilities. This means that a large number of companies with onshore facilities are not able to process fish for export to Europe.

The fisheries sector accounts for about 40 per cent of Mozambique's commodity exports, bringing in between $80 and $90 million a year.

New bank reference rate introduced

The Bank of Mozambique and the six major commercial banks on 16 June signed agreements setting up the Maputo Inter-Bank Offered Rate (MAIBOR), which will function as an indicative interest rate.

As from 1 July the banks who have signed this agreement must inform the central bank by 11.00 every day of their interest rates, and by 12.00 the central bank will fax all of them the MAIBOR for that day.

MAIBOR is calculated as an average of all the interest rates, excluding the highest and the lowest.

The rates involved are those practised by the banks themselves on the Inter-Bank Money Market, which was set up in September 1997. Currently most operations on the Inter-Bank Market are very short term, ranging from one day to 30 days.

Adriano Maleiane, governor of the Bank of Mozambique, thought MAIBOR would have a stabilising effect, and would lead to operations for longer periods. As from 1 July, the maximum period for operations on the Inter-Bank Market will be 90 days, but after a year it should rise to six months, and then to 12 months.

MAIBOR, which will be published in the main paper every day, will supply that reference point. Currently the average interest rate on 30 day operations on the Inter-Bank Market is around eight per cent, said Maleiane. He expected MAIBOR to operate as a factor bringing interest rates down. As long as inflation remained low, the increasingly competitive nature of the financial system was bound to result in lower interest rates, he argued.

Opposition politician loses libel case

Domingos Arouca, leader of the Mozambique United Front (FUMO) on 17 June lost a libel suit against the country's Sunday paper Domingo.

The case had serious implications for press freedom, since Arouca had demanded damages of 25 billion meticais (about $2 million).

Arouca took exception to an opinion article written by Gabriel Simbine, a prominent member of Frelimo, which appeared in Domingo in May 1998.

In this article Simbine responded angrily to claims made by Arouca that the founder and first President of Frelimo, Eduardo Mondlane, had been killed in 1969, not by the Portuguese secret police, the PIDE, but by the left wing of Frelimo.

Several articles refuting Arouca's thesis have appeared in the press, but Simbine's called into question Arouca's anti-colonial credentials, and suggested that he shared the fascist ideology of Portuguese dictator Antonio Salazar.

Arouca sued for libel not only Simbine and Domingo, but also the company that publishes Domingo, Sociedade de Noticias SARL, and Editores Associados, the company that manages the paper.

The director of Domingo, Jorge Matine, put up a defence based on press freedom. He said that Domingo's pages are open to a variety of opinions.

Giving his verdict the judge declared that Simbine's article fell within "the scope of freedom of expression and of political debate".

Cotton production lower than hoped

Mozambique now expects to produce about 70,000 tonnes of raw cotton in this year's harvest, according to the director of the Mozambique Cotton Institute (IAM), Eugenio Gove. This is a long way below the initial, optimistic projections of a harvest of 100,000 tonnes.

Gove told AIM that climatic problems, mainly excessive rains in cotton growing areas, were the cause for this sharp reduction.

In the 1998 harvest, the country produced 90,000 tonnes of raw cotton, mainly from the northern provinces of Nampula and Cabo Delgado. But there is currently a major problem in marketing cotton, Gove admitted. The world market price for cotton fell sharply in 1998 and remains low.

This is largely a result of the Asian financial crisis. The south-east Asian economies are no longer importing vast amounts of cotton, and still have a great deal of cotton in stock. Furthermore, cotton faces a strong challenge from man-made fibres.

This unfavourable market situation has led the Mozambican government to drop the producer price for raw cotton. Gove said the government has approved minimum producer prices for this year's harvest of 2,300 meticais and 1,950 meticais a kilo for first and second grade cotton respectively (at current exchange rates, there are 12,541 meticais to the US dollar).

Gove said these prices resulted from a consensual proposal made to the government by the IAM, representatives of peasant associations, and the concessionary companies that buy the cotton from the peasants.

Last year, the price was 2,950 meticais a kilo for first grade cotton, and the companies protested that buying cotton from the peasants at this price meant incurring heavy losses.

Rehabilitation of Chokwe irrigation scheme

The publicly-owned company HICEP (Chokwe Hydraulic Company) intends to start cleaning the 90 kilometres of the main channels in the Chokwe irrigation system, the largest in Mozambique, on 21 June.

The chairman of the HICEP Board of Directors, Rodrigues Pereira, told journalists of his plans to rehabilitate the irrigation system on 11 June during the visit to Chokwe by the Prime Minister of Cape Verde, Carlos Veiga.

Chokwe is at the heart of the Limpopo Valley, in the southern province of Gaza, and the publicly-owned irrigation system was established on what were once farms owned by Portuguese settlers. But the irrigation scheme has never lived up to the hopes that it could make Chokwe the granary of southern Mozambique.

After some promising rice harvests in the late 1970s, Chokwe fell into decline, and was badly hit by the cyclical droughts of the 1980s and early 1990s.

Pereira said that cleaning the main channels should be concluded by September, in time for the start of the 1999/2000 agricultural campaign. This was part of the work needed to repair the entire system "so that within about two years it can again occupy the place it once held in the country's economy".

With obstructions removed from the main channels, HICEP hopes to ensure that there will be enough water available to irrigate 10,000 hectares - 5,000 hectares of rice, 3,000 hectares of other food crops, and 2,000 hectares of cotton.

Recently, farmers using the system have complained that it does not provide them with enough water, and they have also objected to the prices charged by HICEP to the system's users.

Pereira defended the current pricing system, under which farmers pay 450,000 meticais (about $38) per hectare to use the irrigation system during the warm, rainy season, and 350,000 meticais per hectare in the cool, dry season.

With rehabilitation, the price will rise. Pereira said that once the system is fully operational users will be charged an annual fee of $120 per hectare.

Kuwait Fund to pay for sub-station

The Mozambican government and the Kuwait Fund on 18 June signed a loan agreement under which the fund is to provide about $10.8 million for the construction of an electricity sub-station in the city of Matola.

Signing the agreement were Planning and Finance Minister, Tomas Salomao, and the Director-General of the Kuwait Fund, Bader Al-Humaidhi.

The sub-station will be the property of the publicly owned electricity company, EDM, and will be linked to an existing sub- station in the suburb of Infulene.

New disaster management body

The Mozambican government has abolished the government department in charge of disaster relief work, the DPCCN, replacing it with a semi-autonomous National Disaster Management Institute (INGC).

Announcing the change on 11 June in Maputo, Foreign Minister Leonardo Simao said that an institute was a much more flexible and autonomous form of organisation than a government department in its day to day activity.

Simao said that, throughout a history spanning almost two decades, the major problem the DPCCN had always faced was the theft of produce by dishonest members of its workforce. To minimise this problem the INGC will not handle stocks of foodstuffs or other relief goods. Instead, it will have access to an emergency fund to be used whenever disaster strikes.

Simao said that the government has also abolished the inter-ministerial National Demining Commission (CND), and its Executive Directorate, replacing them with a National Demining Institute. The same arguments of autonomy and flexibility apply to this as to the change in disaster relief bodies.

The government adopted a demining policy, Simao added, centred on strengthening the technical capacity of the new institute, building up demining capacity among the armed forces, and encouraging the creation of Mozambican demining companies. Currently the overwhelming bulk of demining in Mozambique is undertaken by foreign companies and NGOs.

Aid agreements with France

The Mozambican and French governments on 11 June signed two aid agreements under which France is to provide 14 million francs (about $2.15 million) for the health services and for municipal development.

One agreement, valued at eight million francs, concerns assistance for the health services in the Cabo Delgado province. The money will provide "institutional support" for the provincial health directorate and for two "priority" district health directorates. It is to be used on areas as staff training, health planning, hospital management, and supervision and integration of priority programmes such as mother and child care, and basic vaccinations.

In particular the hospital in the provincial capital, Pemba, is to be assisted, through a programme that will modernise its services and management. Operating theatres, emergency wards and laboratories will all be rehabilitated.

This programme also envisages twinning Pemba hospital with the hospital on Mayotte, the island in the Coromor archipelago that is still a French possession.

The second agreement, worth six million francs, is for the municipal development of the cities of Beira, Quelimane, Nampula and Pemba. The project envisages putting up plaques with street names, as was done in Maputo a couple of years ago with French aid. This will cost 4.5 million francs. The rest of the money will be spent on training municipal staff in the technical management of urban infrastructures.

Prices fall in May

The monthly rate of inflation in Maputo turned negative in May, according to the latest figures on the consumer price index issued by the National Statistics Board.

The price fall was 1.6 per cent. Prices of food and drink fell most - by two per cent. "Comfort and housing expenses" fell by 1.6 per cent.

Most other classes of goods (such as "clothing and footwear", "health care", "transport and communications", and "education culture and entertainment") showed no change during the month. The miscellaneous class of "other goods and services" saw a price rise of 0.5 per cent.

Accumulated inflation, from January through to May, was 3.5 per cent, and inflation over the entire year (June 1998 to May 1999) was 1.6 per cent.

The inflation figure for 1998 (January to December), as calculated by the Bank of Mozambique was minus 1.3 per cent. For the first time, an entire calendar year showed an average drop in prices. Again the price drop was mainly in the areas of foodstuffs and domestic fuel (firewood and kerosene).

Cement factory hit by strike

Workers at a cement factory, "Cimentos de Mocambique", in the Maputo suburb of Matola went on strike on 18 June, paralysing all the factory plants and offices.

The workers demanded equal treatment and rights between Mozambican and foreign technicians, and the return of four lorries sold under alleged strange circumstances.

The management has said that the strike is illegal and will not negotiate without the mediation of the Labour Directorate and trade union.

Ilidio Dinis, one of the factory's administrators, said that it makes no sense that workers should seek a salary increase due to fact that the factory's minimum wage is twice that stipulated by the government, and with additional subsidies workers go home every month with more than 1,000.000 meticais (slightly less than $80). The minimum statutory wage is 450,000 meticais.

Mozambique News Agency
Fenner Brockway House
37/39 Great Guildford Street
London SE1 0ES

Tel: 0171 928 5657,
Fax 0171 928 5954

Return to index