Mozambique audit reveals $500 million of $2 billion in loans are missing
Kroll, an independent auditing firm hired to investigate Mozambique’s state loans, presented a report on Saturday, June 24, detailing the extent and nature of the country’s debt. It found that more than a quarter of the $2 billion in secret loans the government took out in 2013 and 2014 with lenders Credit Suisse and Russian investment bank VBT Capital—ostensibly to set up a state-sponsored tuna fishing company—remain unaccounted for to this day. The government did not disclose these loans to the International Monetary Fund and other donors in 2013, and upon their revelation in April 2016, donors suspended aid to the government, which amounted to nearly a quarter of its budget, plunging the country into financial crisis. In October 2016, the Ministry of Finance announced that it would not be able to service its commercial dollar debt, and then the government defaulted on its $727 million Eurobond in early 2017. The country has also missed interest payments on two state-guaranteed loans.
Research Analyst and Project Coordinator - Africa Growth Initiative
Creditors have said that they will engage in debt restructuring talks with the government once the audit is published and a new economic program is developed with the IMF. The IMF announced that it will visit Mozambique from July 10-19 to discuss the management of public finances as well as the newly released report, stating that “The publication of these documents constitutes an important step toward greater transparency regarding the loans…However, information gaps remain, in particular on the use of the loan proceeds.” Meanwhile, Prime Minister Carlos Agostinho do Rosario focused on the positive outcomes of the report, telling reporters, “Certainly, it brings recommendations that will serve as a basis for us to continue strengthening levels of transparency in public management.”
Nigeria aims to bolster tax revenues through amnesty program
Acting President Yemi Osinbajo of Nigeria signed an executive order on Thursday to launch a new tax amnesty program that encourages citizens and companies to pay tax arrears voluntarily without being subject to penalties, interest payments, or criminal investigation and prosecution for tax offenses. The Voluntary Assets and Income Declaration Scheme (VAIDS), as the scheme is called, will run from July 1, 2017, to March 31, 2018, and strives to raise more than $1 billion to help fund Nigeria’s growing budget. The government expects the program to add 4 million new taxpayers to its base. According to Osinbajo, “The Joint Tax Board, JTB, as at May 2017 disclosed that the total number of tax payers in Nigeria is just 14 million out of an estimated 69.9 million who are economically active.” One reason that tax evasion is so rampant in Nigeria, he argues, is that many states lack the infrastructure to track the income of their residents. Furthermore, some tax evaders manipulate accounting records, use complex structures in transactions, or refuse to register for value added tax or pay capital gains tax. To complement VAIDS and raise awareness about tax issues, Osinbajo also declared that every Thursday will be “Tax Thursday” and 7,500 Community Tax Liaison Officers will work with local communities across the country to educate Nigerians on the role of tax in national development.
Ethiopian Airlines expands its aircraft fleet
This week, Ethiopian Airlines made progress toward expanding its fleet, allowing it to remain one of the continent’s largest air travel providers. The company signed a $1.5 billion deal with British engine maker Rolls Royce. The United Kingdom based company will equip 10 newly acquired aircrafts with Rolls Royce Trent XWB engines. The deal also includes a maintenance clause for 14 Ethiopian airline flights in service or on order. The new engines will increase the amount of data generated per flight, thus allowing for the improvement and acceleration of decisionmaking processes. Moreover, the engine will be prone to “remote surgery” techniques, allowing technicians at Rolls Royce’s Airline Aircraft Availability Center to carry out complex tasks on the engine remotely.
The Rolls Royce deal follows one signed last week between Ethiopian Airlines and Airbus. Ethiopian airlines plans to purchase 10 of Airbus’ new A350 aircrafts, amounting to a monetary value of $3 billion. The newly acquired planes will be deployed on long haul flights connecting Addis Ababa to destinations in Europe, Africa, the Middle East, and Asia. Similar orders were placed with Boeing and Bombardier. Boeing states that Ethiopian Airlines has ordered two 777 aircrafts at a value of $651.4 million. Bombardier is presently manufacturing an additional five Q400 turboprop aircrafts for the airline. Ethiopian Airlines was recently presented with the SKYTRAX World Airline Award for the Best Airline in Africa at the Paris Air Show.