Mozambique President Filipe Nyusi is in Washington for a series of meetings with International Monetary Fund (IMF) Managing Director Christine Lagarde, World Bank President Jim Yong Kim, Secretary John Kerry and US AID's Gayle Smith. The IMF suspended loans and the World Bank suspended direct aid to Mozambique after learning the country hid more than $1 billion in debt. The Fund requested an audit of Mozambique's debt before resuming lending. Mozambique's debt is equal to 86% of the size of its economy and grew 144% between 2010 and 2014.
"These are emergency meetings in a time of crisis," noted Eric LeCompte, the executive director of the religious development coalition Jubilee USA. LeCompte serves on UN experts groups that focus on sovereign debt. "We have great concern for how this crisis impacts people living in one of the world's poorest countries."
In 2013, international banks loaned Mozambique $800 million to build tuna fishing boats, but more than $500 million of those funds may have been used to purchase military equipment. The banks loaned an additional $600 million for naval equipment that was not disclosed to investors and international financial institutions. In Mozambique, concerns grow that these monies were secured in ways that violated budget transparency and parliamentary approval laws.
According to the United Nations, Mozambique is the world's ninth poorest country. More than half of its population lives in poverty. Mozambique paid approximately $169 million in debt service in 2014, more than triple what it paid in 2011. According to research from Global Financial Integrity, the country loses an average of $243 million each year to crime, corruption and tax evasion.
"Audits are important government accountability tools for citizens," stated LeCompte. "We also need to see improved regulation in the global financial system that encourages budget transparency and promotes responsible lending and borrowing."