The government of Mozambique is desperate to win the confidence of international financial institutions, the World Bank and International Monetary Fund, after the scandalous exposure of US$ 2.5 billion in hidden loans early 2017.
In a bid to restore the credibility of his administration, last December, the country’s president, Felipe Nyusi, fired four cabinet Ministers, including those holding foreign affairs and energy portfolios. Energy is a key portfolio in Mozambique, which has vast untapped offshore gas reserves that are being developed by oil majors such as Italy’s Eni.
The reason for the dismissals was not officially disclosed, but it widely believed that it is linked to the stories of corruption that have dogged his administration.
International financial institutions are still waiting to see how the government handles the case of the proverbial elephant in the room, the undeclared debts, whose expenditure is yet to be accounted for.
After the hidden debt scandal, the World Bank and International Monetary Fund suspended budgetary support programmes it had been running for the Mozambican government.
Analysts fear that this might lead to liquidity shortages in the economy, which might affect the implementation of gas projects.
Last November, during a presentation about opportunities in Mozambique’s Mining Oil and Gas (MOG) sectors which held in Johannesburg, two experts from a prominent Mozambican legal firm acknowledged that the debt scandal had raised doubts about the government’s commitment to transparency and accountability.
The implementation timelines of gas projects have been adjusted, due to weak gas prices on the international market. The country was supposed to be exporting gas by 2018. Now the cutoff point has been shifted to 2019.