Mozambique News Agency

AIM Reports


No.341, 16th May 2007


Foreign debt now stands at $3.3 billion

Mozambique's foreign debt stock at the end of 2006 stood at $3.3 billion, Finance Minister Manuel Chang told the Assembly of the Republic on 2 May. Answering a question from the opposition Renamo-Electoral Union coalition on the country's debt, Chang said that by 1998 Mozambique's debt stock had reached six billion dollars, in nominal terms. Then came the two phases of the Heavily Indebted Poor Countries (HIPC) debt relief initiative, which cut the Mozambican debt to $4.6 billion by the end of 2005. Due to HIPC, the annual servicing of the Mozambican debt fell from over $100 million to about $57 million.

Chang warned that nobody should imagine that HIPC cancelled all of Mozambique's bilateral debt. Far from it - for instance, HIPC-1 had a cut-off date of February 1984. Any debts contracted after that date were not covered. "Furthermore, in the treatment of debt relief, cancellation may be implemented on the dates of debt service payment", said Chang, "and so the reduction in the debt stock could take years".

In 2005, under pressure from the G-8 group of most industrialised nations, the IMF, the World Bank and the African Development Bank (ADB) agreed to cancel the debts of the poorest countries.

Under this Multilateral Debt Relief Initiative (MDRI), the IMF cancelled the entirely of the debt owed by Mozambique up to 31 December 2005, which amounted to $154 million. Using the same cut-off date, the ADB cancelled $500 million of debt.

The World Bank adopted a different procedure. It used 31 December 2003 as the cut-off date, and although the full amount involved is $1.3 billion, the Bank is cancelling it year by year - thus in 2006 only $255 million of Mozambique's debt to the World Bank was cancelled.

The savings from debt relief have been used in the government's development programmes, said Chang. They have allowed a 65 per cent increase "in the allocation of resources to the social sectors with a direct impact on poverty reduction".

Chang pledged that the government will continue "to keep the debt sustainable, with a reasonable level of debt servicing, in line with the capacities of our budget". In seeking foreign aid, the government would prioritise grants first, and then highly concessional loans. But these soft loans remained essential, and so the government would continue to contract further debts.

Turning to domestic indebtedness, Chang said this was "a fundamental instrument for financing the budget deficit, for supporting monetary policy and for developing the financial sector".

The domestic debt takes the form of treasury bonds. As of 31 December 2006, the stock of treasury bonds was 5.2 billion meticais (about $201 million). Chang stressed that the government is scrupulously complying with its obligation to service these debts.

Mozambique buys back commercial debt

Under an agreement signed on 10 May between the Mozambican government and the World Bank, Mozambique has bought back its commercial debt for nine per cent of its nominal value.

The agreement grants Mozambique $16.1 million, which will buy back commercial debt with a nominal value of $176 million. This is $119.8 million in capital, and $56.2 million in interest.

By far the largest of these commercial creditors is the Bank of Brazil, to which Mozambique owed $151.9 million. The other creditors are the companies Raffels AG of Switzerland (which bought $10.2 million of Mozambican debt from the Czech Republic), Brodoimpeks of Serbia (which inherited a debt to Yugoslavia of $8.8 million), and the Export-Import Bank of India ($5.2 million).

The grant mostly came from Norway, which provided $14.7 million, and the World Bank topping it up with a further $1.4 million.

This is the second buy back operation. The first was in 1991, and allowed Mozambique to write off $123.8 million of commercial debt. With this latest operation, the Mozambican government is totally free of commercial debt.

Report on HIV delivered at Assembly

As of 31 March there were 53,414 HIV-positive people undergoing anti-retroviral (ARV) therapy in Mozambique, according to a report given on 10 May to the Mozambican parliament, the Assembly of the Republic, by the Parliamentary Group on Preventing and Fighting AIDS.

The number of people receiving the life-prolonging anti- retroviral drugs rose from 46,871 at the end of January, to 49,833 at the end of February, to 53,414 at the end of March. The number of new patients receiving ARV therapy in March was 3,581 - the largest ever jump in a single month.

Sixty per cent of those receiving anti-retrovirals are women, and 3,683 are under the age of 15. There are now 166 health units in the country offering ARV treatment, covering all Mozambican cities and all districts, urban and rural.

It is estimated that, of the over 1.4 million HIV-positive Mozambicans, about 300,000 have now reached the stage of the disease at which they ought to be taking anti-retrovirals.

As for legislation on AIDS, the report noted that the Assembly has now received from NGOs working in the area a draft bill on the defence of the human rights of HIV-positive citizens. So far, the only specific legislation passed by the Assembly on AIDS was a law of 2002 to protect HIV-positive workers from dismissal or discrimination at the workplace.

The matter will now go before the Assembly's Legal Affairs Commission, and the report hoped that a bill on the matter could be passed in the October- December parliamentary sitting.

In the debate Ismael Mussa of Renamo protested at the exorbitant prices charged by Mozambican Television (TVM) and Radio Mozambique for broadcasting anti-AIDS advertisements.

He called on the radio and television to reduce their prices. Indeed, since these are public service advertisements, "why shouldn't they be broadcast free of charge?" Mussa asked.

Manuel Pereira of Renamo claimed that schools contribute to the spread of AIDS by teaching children about condoms. As a result "children want to experiment", he claimed. He wanted to return to the days of "morality" in the schools, when there were matters "that you couldn't speak to children about".

The current situation could have been avoided, alleged Pereira, if people only listened to "what the churches preach".

Assembly appoints members to Election Commission

The Assembly of the Republic on 9 May elected its five members to the National Elections Commission (CNE), the body that will oversee this year's provincial elections, the 2008 municipal elections and the 2009 presidential, and parliamentary elections.

The election was a formality, since the five were chosen in accordance with the political parties' representation in parliament - which means that the ruling Frelimo Party appointed three members, and the Renamo-Electoral Union opposition coalition appointed the other two.

The Assembly plenary rubber-stamped this choice, once the Assembly's Legal Affairs Commission confirmed that all five were eligible.

The three CNE members appointed by Frelimo include two members of the previous CNE, which organised the 2004 general elections, namely Antonio Chipanga and Jose Grachane.

Chipanga was deputy coordinator of the CNE's training and civic education commission. He is also a lawyer and university law lecturer.

Grachane is a computer specialist, and was one of the first computer programmers trained in Mozambique (in 1984). He worked on the CNE's Electoral Organisation and Operations commission. He is also a high-ranking official in the Finance Ministry's National Gaming Inspectorate.

The third Frelimo appointee, Rodrigues Timba, is a jurist who advises Isabel Nkavandeka, the Minister in the Presidency for Parliamentary Affairs.

Renamo also decided to re-appoint one of its nominees to the previous CNE. He is Isequiel Gusse, who worked on the CNE's Legal and Ethical Commission. He currently works in the law faculty of one of the country's private universities.

The second opposition appointee, Amandio de Sousa, is a member of the National Convention Party (PCN), one of the small parties allied to Renamo in the coalition. He is a secondary school teacher from the central city of Beira, who was a member of the Beira Municipal Assembly between 1998 and 2003.

Under the amended electoral legislation passed last December, the CNE consists of 13 members, five appointed by the parliamentary parties, and eight from civil society organisations.

A jury has been formed from some of the leading civil society bodies, headed by Brazao Mazula, who chaired the country's first CNE, which organised the 1994 elections.

Labour Law bill passes second reading

The Mozambican parliament, the Assembly of the Republic, on 11 May unanimously passed the second and final reading of a new labour bill, demanded by employers (backed up by the World Bank and the IMF), and reluctantly acquiesced in by the trade unions.

As passed, the new bill reduces workers' rights - but by less than had been feared. A last minute compromise between the trade unions and the Confederation of Mozambican Business Associations (CTA) has been incorporated into the bill, and offers some guarantee that workers who signed contracts under the 1998 law will not see their entitlements (particularly to redundancy pay) removed.

The bill submitted by the government to the Assembly proposed redundancy pay of 20 days wages for each year worked. But the final deal between the unions and the CTA raised this by up to 50 per cent.

As passed, the bill ties redundancy pay to the level of the dismissed workers' wages. Thus workers made redundant who were earning up to seven times the statutory minimum wage will receive compensation of 30 days wages for each year worked.

For workers who earned between eight and ten times the minimum, their redundancy pay falls to 15 days wages for each year worked. The entitlement falls to 10 days' wages per year of employment for workers who had been earning between 11 and 16 times the minimum wage. For more than that, redundancy pay will be just three days wages for each year worked.

The bill contains a few innovations. It greatly expands the types of contract that may be signed - explicitly allowing short-term contracts for a fixed period, contracts for part time work, and contracts for employees working from home.

For the first time the bill introduces paternity leave - of one day's leave when the child is born. (This is in addition to the unchanged entitlement of women workers to 60 days maternity leave).

Most trade union rights remain unchanged by the bill, but there are slight alterations to the rules governing strikes. Workers planning strike action must now give five days advance warning, rather than the three days of the 1998 law. Strikes are explicitly banned only for the police and the armed forces.

The Assembly passed three other bills unanimously on 10 May. It passed the second and final reading of a bill to set up a Financial Intelligence Office (GIFIM) that will help combat money laundering. The bill states that GIFIM will be run by a Coordinating Council chaired by the Prime Minister. The Council's other members will be the Finance, Interior and Justice Ministers, the Attorney General and the Governor of the Bank of Mozambique.

The Assembly also passed unanimously the second reading of bills establishing new tax regimes for the oil and mining industries.

Under these bills, any company that strikes oil in Mozambique will pay a 10 per cent tax on the value of the oil produced, determined by average weighted international prices. For natural gas, the tax rate will be six per cent.

As for mining, there will be two taxes - one on production, and one on the area covered by mining licences. The mining production tax rates will be 10 per cent on the value of diamonds, precious metals (gold, silver and platinum) and precious stones, six per cent for semi precious stones, five per cent for base metals, and three per cent for coal and other mineral products.

The tax on surface area ranges from ten to 5,000 meticais per square kilometre, depending on the type of licence or concessions (at current exchange rates there are about 26 meticais to the US dollar).

Provincial Elections may cost $45 million

Elections for provincial assemblies, due before the end of this year, could cost up to $45 million, according to Antonio Carrasco, general director of Mozambique's Electoral Administration Technical Secretariat (STAE), the electoral branch of the civil service.

Cited in "Noticias" on 4 May, Carrasco said this figure includes the costs of voter registration and the installation of new computer equipment for the electoral bodies. STAE has already sent a draft budget for this sum to the government.

Speaking in Maputo, at the opening of a meeting of the STAE Consultative Council, Carrasco sounded the alarm. "We must remember that we are talking about re-registering the entire electorate", he said. "Things are not going to be as easy as one might imagine".

The figure only covers the provincial elections - there is no budget yet for the municipal elections scheduled for 2008, or the presidential and parliamentary elections that should take place in 2009.

Carrasco was concerned that STAE might have to register the electorate before the general population census, scheduled for August. For it was the census that would give the accurate figure of how large the potential electorate (Mozambicans aged 18 and above) is. From the census STAE would know how many people it should register and where they all are. "But if STAE has to do the registration before the census, then we will have to work with approximate projections, and not with real numbers", protested Carrasco.

Asked whether it was possible to hold the provincial elections this year, Carrasco was cautious. "We're still working on the planning", he said, "and only afterwards will we be able to say anything. We're still studying the laws (the heavily amended electoral legislation passed in December) and then we will see whether it is possible, within these laws, to hold the elections for provincial assemblies this year".

The Consultative Council, he added, was looking into the deadlines fixed by law, and after that the participants will work out a number of scenarios and submit them to the National Elections Commission.

CFM obtains more locomotives

The southern regional branch of the ports and railway company (CFM-Sul) has obtained a further five diesel locomotives from India, to add to the 12 currently operating in the Maputo Corridor, and expects to receive a further five by July. These are reconditioned locomotives that CFM-Sul has acquired under a long lease system, for which the company will be paying $2.4 million a year for the next three years.

Aboobacar Mussa, responsible for the project, cited in "Noticias" on 4 May, said it was decided to lease reconditioned locomotives, because purchasing new ones would be prohibitively expensive. Mussa said that each new locomotive would cost about $5 million, while all 10 Indian locomotives will cost just $7.2 million for three years.

The locomotives, he stressed, would make it possible for CFM to meet its commitments, particularly along the Maputo-South Africa railway.

In addition to the locomotives in working order, CFM-Sul is also working to rehabilitate another 45, on which it has invested about $31 million.

Malaria remains number one killer

The Ministry of Health has announced that malaria remains the largest single cause of sickness and death in the Mozambican health system, with almost two million cases diagnosed between 1 January and mid- April this year, resulting in the deaths of 1,189 patients.

These figures are conservative: they are the cases and deaths that the Ministry of Health knows about. Malaria sufferers in remote areas who were unable to reach a health post will not be in these statistics.

The latest bulletin from the Ministry covering the week 8-14 April, says that in that period alone 118,057 cases of malaria were recorded, resulting in 71 deaths. The real figures are certainly larger, since two provinces (Manica and Cabo Delgado) had not yet sent their figures for that week to the Ministry.

The province worst affected by malaria that week was Gaza was with 31,707 cases and 18 deaths, followed by Nampula with 31,665 cases and 17 deaths. These figures show no decline in malaria cases from 2006, when 6.3 million cases were diagnosed and 5,156 people died from the disease.

Malaria is endemic throughout the country. It is responsible for 40 per cent of all consultations in Mozambican health units. 60 per cent of the children in Mozambican paediatric wards are admitted because of severe bouts of malaria.

Malaria remains the largest single cause of mortality in Mozambican hospitals, where it is responsible for 30 per cent of all recorded deaths.

Candidates for Cahora Bassa bank syndicate

A syndicate formed by the French bank CA Lyon and the Portuguese BPI is likely to lend Mozambique the $700 million it needs to purchase a majority stake in the Cahora Bassa dam, on the Zambezi river.

Ever since the completion of the dam, the majority shareholder in the operating company, Hidroelectrica de Cahora Bassa (HCB), has been the Portuguese state, with 82 per cent. The remaining 18 per cent is in the hands of the Mozambican state.

Under a deal signed last year between President Armando Guebuza and Portuguese Prime Minister Jose Socrates, Mozambique will own 85 per cent of the HCB shares, while the Portuguese participation will drop to 15 per cent.

Mozambique has agreed to pay Portugal $700 million for 67 per cent of the shares. (The separate question of HCB's debt to the Portuguese treasury was solved with a payment of $250 million from HCB's own coffers.)

The Mozambican government has always been confident that it can raise the $700 million through a bank loan. Now that the country is at peace, and HCB is a viable concern, selling power to South Africa and Zimbabwe, as well as to the Mozambican state electricity company EDM, it should be possible to repay the loan out of the Mozambican state's share in HCB profits.

In March, the government invited Mozambican and foreign financial institutions to make proposals for the loan. Banks were to put in their bids by 15 April, and the government then hired an international auditing company to analyse the bids. That company ranked the top three bids.

The first came from the Portuguese Investment Bank (BPI), in alliance with CA Lyon, a French investment bank formed out of the merger between Credit Lyonais and Credit Agricole. BPI is already involved in the Mozambican financial market through a 30 per cent holding in the country's second largest commercial bank, the BCI-Fomento.

Under last year's agreement the 700 million dollars should be paid to Portugal by the end of this year. Under "exceptional circumstances" the deadline can be extended to 30 June 2008, provided Mozambique pays at least 50 per cent of the sum this year.


This is a condensed version of the AIM daily news service - for details contact


email: Mozambique News Agency

Return to index