Mozambique News Agency

No.162, 20th July 1999


Paris Club agrees further debt reduction

The Paris Club of creditors nations agreed in Paris on 8 and 9 July to a reduction of 90 per cent in Mozambique's stock of debt, in a measure aimed at making the country's external debt "sustainable". According to the Ministry of Planning and Finance, the creditors decided "as their contribution under the Highly Indebted Poor Countries (HIPC) initiative, to recommend a treatment providing for a reduction of 90 per cent in net present value of the stock of debt due in eligible loans and credits".

This represents the Paris Club share of debt reduction in the framework of the existing HIPC initiative from over 500 per cent to 200 per cent of exports, says the document.

According to the creditors, the decision will result in the cancellation of $2.2 billion of Mozambique's external debt. $1.4 billion of the amount is granted under the Naples terms, and $0.8 billion under the HIPC initiative.

The writing off of debt will result in Mozambique reducing its debt service payments. Over the period 1995 - 1998 Mozambique spent an average of $114 million a year on debt service payments. The Bretton Woods institutions (the World Bank and the IMF) had expected this to be reduced to $100 million per year under the original HIPC terms. However, with the additional support of the Paris Club, and a re-evaluation of the country's export figures and other technical readjustments, it is now expected that payments will be reduced to an average of $73 million from 1999 to 2005.

There is even better news for the country on the horizon. Over the next few months Mozambique can expect further cuts in its debt following decisions made at the G-8 meeting in Cologne in June. The journalist Joe Hanlon has projected that debt service payments may fall to $55 million per year.

The creditor countries also agreed to include in the reorganisation of Mozambique's debt a voluntary debt swap facility of up to 30 per cent of the stock of debt of each creditor country. This would increase even more the country's expenditures on education, health and poverty alleviation programmes.

After a recent announcement by the twin Bretton Woods institutions to write off $1.7 billion in today's values, the country stood to spend $175 million on social programmes.

However, one nagging question is how much is Mozambique's external debt today? Before all these announcements the debt was estimated at $5.5 billion, but attempts to get the authorities to quote the latest figure of debt have produced silence.

Campaigners have continued to call for a complete write-off of the debt. Despite this, there has been a warm welcome to the fact that debt-service payments will fall by around $41 million per year, with up to an additional $20 million a year in the pipeline under the Cologne terms.

US embassy closes following threats

The United States shut its embassy in Maputo on 19 July for an indeterminate period. Harriet McGuire, cultural and press attaché of the United States Information Services (USIS) said the measure follows recent threats to American lives and targets the world over received by the US State Department.

The US has been beefing up its security following the August 1998 simultaneous bombings of its embassies in Nairobi and Dar es Salam which claimed 224 lives and injured more than 4,000 people.

The US embassy in Maputo was recently the centre of a storm because of its decision to build barricades in its vicinity, closing a road traversing the embassy and the building of the USAID, as well as closing a pavement at the US marine residence in Julius Nyerere Avenue without prior authorisation.

This angered Municipal deputies. However, because of the delicateness of the situation US pledges of compensation for violations of municipal laws have been accepted.

Development projects for repatriated

Thousands of Mozambicans facing repatriation from South Africa as a result of the on-going crisis in that country's gold mining sector may be reintegrated into social and economic development projects in Mozambique. This was agreed in the South African city of Pretoria by the Defence, Migration and Security joint sub-Commission.

The meeting also discussed such issues as the repatriation of Mozambicans, the notification of the Mozambican authorities of case of detained subjects, immigrants legalisation, among others.

Currently South Africa is home to more than 70,000 Mozambicans working in its gold mines. It is feared that more than five thousand will be laid off and repatriated following the crisis that hit the mining sector.

At least 2,500 Mozambican miners have been retrenched in the wake of the liquidation of the East Rand Proprietary Mine (ERPM) in Johannesburg. Six other gold mines will soon cut their labour- force.

Election Update

Electoral registration to start on 20 July

Voter registration for Mozambique's second presidential and legislative elections is to start on 20 July, and will cost about $3 million.

Announcing the event, the chairman of the National Election Commission (CNE), Jamisse Taimo on 18 July urged all citizens to take an active part in the process.

The government set the date for the voter registration to run between 20 July and 17 September. Authorities hope to register more than eight million eligible voters.

Voting cards acquired either at the first elections in 1994 or for the municipal elections 1998 will not be valid. Taimo said one reason for complete re-registration was that books for those two earlier elections had not been kept properly.

Electoral materials to be distributed by helicopter

Three helicopters hired from South Africa and paid for by the European Union will help distribute materials for voter registration.

One of the helicopters will be allocated to Maputo, to serve the southern Maputo, Gaza and Inhambane provinces, whereas the other two will be in Beira, serving the central Sofala, Manica and Tete provinces, and in Nampula, to serve the Nampula, Cabo Delgado and Niassa northern provinces. However, mechanical difficulties with the helicopter in Niassa is likely to result in delays.

The helicopters are to support the work of 50 vehicles, made available by the Electoral Administration Technical Secretariat (STAE).

CNE decides no voting abroad

The CNE on 9 July said that Mozambicans living abroad will not vote in the forthcoming elections, scheduled for late this year, because of the high costs involved in an operation of that nature.

A study conducted by the STAE, the executive branch of the CNE, concluded that conditions are not ripe for the registration of Mozambican voters abroad "because of scarcity of time and financial resources".

According to the study, that was made public this month, the country cannot afford to repeat the 1997 "bitter" experience, when "huge" amounts of money, human and material resources were invested to prepare the 1998 municipal elections and, at the end, "the results did not compensate".

Civil servants to help electoral process

Minister of State Administration Alfredo Gamito on 7 July urged all provincial governors, directors and other civil servants to provide logistical support to the electoral process, including voter education, voter registration and the balloting, "even if that hinders their daily activities.

He explained that the State Administration ministry can afford to give this support because it has vehicles throughout all the country's districts, and it has motorbikes in all administrative posts, which can help overcome transport difficulties faced by the STAE and CNE and their bodies at provincial and district level.

Renamo postpones its congress

Renamo has once more postponed its long-due congress "sine die". Its leader Afonso Dhlakama had announced July 1999 as a probable date for the congress, but Chico Francisco, the party spokesman for its National Council, told a press conference on 19 July that Renamo decided to shelve it to allow its militants to prepare for the forthcoming general elections.

Francisco said it would still happen before the elections to allow that the new party statutes and its government policy proposals be endorsed. He said that the postponement would also grant the party time to look into what it considered "uneasiness" caused by a decision by the STAE to issue a list of "places of difficult access" in the voter registration starting on 20 July.

STAE published a list of 71 districts where it may not be possible to reach even by helicopter owing to a shortage of funds.

Democratic Union coalition further divided

A coalition of three-small parties, the Democratic Union (UD), with nine seats in the Assembly of the Republic, has been plunged into a new crisis following the decision of one of the parties to join the electoral union rallying round Renamo.

According to Noticias on 9 July, PALMO's (Mozambique's Liberal Party) decision to join, without the knowledge of the other two members, the 11 Renamo-led electoral union has widened the gulf within them.

Renamo and 10 other opposition parties announced recently the establishment of an electoral union to run under Renamo's colours, and agreed to have Afonso Dhlakama as its presidential candidate. UD member parties had been negotiating among themselves to renew the coalition and run together for the forthcoming general elections, but PALMO had been postponing the signing of the agreement.

UD's secretary-general, Jose Chucuarra Massinga, accused PALMO's president, Martins Bilal, of "trickery" for delaying the singing of the agreement. Massinga believes that Bilal and the PALMO's secretary general, Antonio Muedo, have been promised good positions if Renamo and its allies win the next elections. He belief stems from the fact that even the head of the UD parliamentary group, who is a member of PALMO, has not been informed of Bilal's decision.

Consequently, the fragmented UD has issued a press release stating their intention to remain together with Massinga as secretary general, and Marcos Juma, the President of PANAMO (National Party of Mozambique), as his deputy.

Graca Machel elected chair of NGO Forum

Graca Machel, the widow of the first Mozambican President, Samoeda Machel, was elected chairperson of the National Forum of the Mozambican NGOs, during the forum's founding assembly on 16 July.

Speaking on the occasion, she said that the existence of various social groups helps safeguard the common interests of the country's democratisation.

She said that it is the NGOs' duty to try and find out how the country's resources are managed and how legislation proposals better society's welfare.

Transport Ministers meet in Tanzania

Transport Ministers of four southern African countries, Mozambique, Malawi, Zambia and Tanzania, are to meet in Dar-Es-Salaam to discuss the main projects of the Nacala Development Corridor. The meeting is in preparation of the donors' conference scheduled for October.

The Nacala corridor includes the port of Nacala and a railway to the hinterland countries. The implementation of the corridor is to start next year.

Meanwhile, the Tanzanian government is expected to sign a road transport agreement with Mozambique to regulate the activities of road transporters between the two countries.

Mauritius to rehabilitate Buzi sugar company

A technical team of Mauritian businessmen is expected to visit Mozambique to assess the property of the Buzi sugar company, in the central province of Sofala, and discuss with the government a plan to rehabilitate the company.

The Buzi Company has been paralysed in 1991 due to the war of destabilisation, and so far all efforts by the government to rehabilitate it have been unsuccessful.

Another Mauritius mission visited Mozambique in June to negotiate with the government on some of the aspects to rehabilitate the Buzi factory and relaunch the planting of sugar cane.

The head of the Mauritius delegation that visited Buzi last month, Raj Virahsawmy, expressed optimism concerning the undertaking. He recalled that a Mauritius consortium, the "Societe Marromeu", is rehabilitating the Marromeu sugar factory, in the Sofala province at a cost of $70 million. The same consortium is planning to rehabilitate the Luabo sugar plant, in Zambezia province.

Conscription list published

Lists to summon about 1,000 youngsters who have been found fit to enter military service in August were made public in all municipal councils countrywide on 15 July.

Maputo city alone is to recruit 324, and mayor Artur Canana explained that, although there are 32 municipalities, the capital is the centre where youngsters from across the country congregate to further their studies or seek work.

The Maputo recruitment centre handed to Canana on 14 July the first lists in a ceremony to mark the resumption of conscription. Conscription was interrupted in 1992 with the signing of the general peace accord which ended the war of destabilisation.

CPLP parliament forum HQ for Maputo

The meeting of the parliamentary forum of the Community of the Portuguese Speaking Countries (CPLP) that ended in Maputo on 13 July confirmed Maputo as the future headquarters of the forum. The decision was taken unanimously by the participants during the evening session on its second and last day.

The headquarters will still function in Lisbon, where they have been provisionally, until all infrastructures and logistics are created in Maputo, which is expected to happen by next year.

Mozambique also took over the post of chair of the forum, replacing the previous years chair, Portugal.

Spanish training for special police units

Instructors of Special Units of the Mozambican police are soon to be trained in Spain in matters of riot, terrorism and protection of high personalities.

Spanish police are also to train instructors of the maritime police, experts in road accidents and criminoligists, including experts in DNA examination.

The Spanish police are currently working under a programme financed by the United Nations Development Programme (UNDP) to reform the police.

Meanwhile, five officials of the Mozambican police were dispatched to East Timor, at the invitation of the United Nations, for a peace monitoring mission. Another group of five officials are expected to leave shortly for Kosovo, also on a peace mission.

German support for development programmes

Germany has granted Mozambique some 83 million Deutsche marks (about $43 million) for the implementation of its development programmes in the period 1999/2000.

The main areas of cooperation are in rural development, professional training, health, the rehabilitation of infrastructures, such as roads and electricity supply network, and mine clearance.

Germany is to contribute a further 15 million marks to rehabilitate the Caia power substation, in Sofala province. It is also to grant about 20 million marks for a project named "General Aid in merchandises: specific measure for the Highly Indebted Poor Countries Initiative".

Libombos initiative protocol signed

Mozambican and South African presidents, Joaquim Chissano and Thabo Mbeki, respectively, and the Swazi king Mswati III, on 5 July signed a protocol on the Libombo Spatial Development Initiative (SDI). The signing of the protocol lends the initiative a legal basis at the highest level.

The initiative aims to promote eco-tourism and industrial development, to attract more investments to the area. SDI covers the area of shared borders between the northern region of the South African province of Kwazulu-Natal, part of southern Swaziland and the southern areas of the Mozambican province of Maputo.

IMF relaxing grip on Mozambique

A close analysis of the International Monetary Fund (IMF) Policy Framework Paper (PFP) and the Letter of Intention has suggested that the institution might be relenting its tight grip on Mozambique.

According to journalist and writer Joe Hanlon, contrary to past experience where the IMF imposed heavy diktats to Mozambique, this time only two new free-market conditions have cropped up.

Mozambique is to be prevented from rescuing its cashew nut processing industry and the government will not be permitted to provide clean water to many of the poorest people in rural areas.

The documents include agreements between Mozambique and the IMF. The PFP is a three-year plan consisting of main policies to be followed by the country, and is revised every year, while the Letter of Intentions is linked to the PFP because it shows government's intention to seek credits for a ESAF (Enhanced Structural Adjustment Facility).

The IMF index of control is measured by the number of "policies measures" countries are obliged to follow to the letter. In Mozambique's case, there are only 71 policies for the period spanning 1999 to 2002, compared to 82 in the PFP of 1998 to 2000.

The decrease is explained by the fact that some previous measures have been fulfilled, such as the privatisation of state owned companies.

The IMF also acknowledges that efforts for the reduction of inflation had been counter-productive. In 1998 inflation was negative (- 1,3 per cent), which could dangerously push the country towards the current deflationary global trend. Thus the IMF predicts that for current year inflation will rise 5.5 per cent, and it will decrease to five percent the following year.

The Bretton Woods institution will also allow the increase of foreign aid and public spending, chiefly because of the forthcoming elections and increase of public sector wages.

Whereas the previous PFP had called for an increase of 22.1 per cent in government spending, the new one calls for a 24.2 per cent increase this year. Similarly, the previous PFP limited the increase in capital spending to 13 per cent while the new one allows a 33.7 per cent rise.

Also, the cap is lifted on "deficit before grant" (the amount of aid money which can be spent". The IMF has also ended its effective tax on aid. Until now, donors had been forced to "sterilise" part of their aid, roughly $80 million per year, by putting it in the bank to build up international reserves rather than spending it on health and education. Last year's PFP projected that reserves of nearly $590 million would have to built up by the end of 1999. The new Letter of Intent calls for reserves of only $518 million by the end of this year, effectively releasing an extra $72 million in aid money.

With IMF agreement, the government has removed credit ceilings, which should end the credit shortage. The IMF says it expects the end of credit limits "to intensify competition among banks" and to lower interest rates on loans.

Education and Health spending will increase faster than global spending - by 16 per cent by the year 2000 - benefiting from additional savings after the debt relief under the HIPC initiative.

The national airline LAM is to be allowed to keep its monopoly on national routes until the end of 2003. Legislation to allow competition in telecommunications need not be submitted to the Assembly of the Republic until June 2000.

Extra-ordinary session postponed

The initial date scheduled for the third extra-ordinary session of the Assembly of the Republic has been postponed. The extra-ordinary session which has been slated to discuss the Constitutional Amendment bill was to start meeting on 20 July. However, Alcido Nguenha, spokesman of the Assembly's Standing Commission, said that the body had decided to postpone the session so as to allow more time to the "ad hoc" commission charged with the revision of the constitution to work.

The delay occurred because parliament had submitted the bill to national debate, and the "ad hoc" commission is harmonising the contributions for a final document to be submitted to the plenary, he said.

Nguenha added that the Standing Commission would be meeting on 6 August to schedule a date for the extra-ordinary session. The session is to last 28 days.

Apart from the revision of the constitution, the session will discuss a new National Anthem. If time is left, he thought bills on the liberalisation of the telecommunications sector and on the industrialisation of the moribund cashew industry would be debated.

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