19 January by Jubilee Debt Campaign
Campaigners from Jubilee Debt Campaign protesting against Credit Suisse’s secret loans to Mozambique, outside their office in Canary Wharf, London
The Mozambique government has said it will not make a $60 million interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. payment due on 18 January
On 17 January, campaigners from the Jubilee Debt Campaign handed in a call from 900 people for Credit Suisse to “come clean” about its facilitation of secret loans to Mozambique. The campaign group is supporting calls by Mozambique civil society organisations for the Mozambique people not to have to repay the loans, and for the Mozambique government officials and lenders responsible to be held to account instead.
The hand-in came the day before Mozambique is expected to default on a $60 million interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. payment.
Campaigners delivered the petition to Credit Suisse’s offices in Canary Wharf, demanding that they release all the information they have on the loans and cancel any debt still owed to them.
Sarah-Jayne Clifton, Director of the Jubilee Debt Campaign, said:
“The hidden loans to Mozambique have been devastating for the people of this southern African country. As usual, the poorest people are suffering the most, with rampant inflation Inflation The cumulated rise of prices as a whole (e.g. a rise in the price of petroleum, eventually leading to a rise in salaries, then to the rise of other prices, etc.). Inflation implies a fall in the value of money since, as time goes by, larger sums are required to purchase particular items. This is the reason why corporate-driven policies seek to keep inflation down. in basic goods and cuts to essential public services because of the debt crisis.
“The Mozambique parliament never agreed the loans, so it should refuse to pay them.
“All those responsible need to be held to account, both the officials in Mozambique who signed-off on the loans, and the banks which facilitated them. Credit Suisse and VTB should come clean about their roles, including by revealing who now owns the debts and what they were sold for, and by publishing the due diligence they conducted before agreeing the loans.”
In April 2016 it was revealed that Credit Suisse and Russian bank VTB arranged loans totalling $1.1 billion to two companies in Mozambique with state guarantees
Acts that provide a creditor with security in complement to the debtor’s commitment. A distinction is made between real guarantees (lien, pledge, mortgage, prior charge) and personal guarantees (surety, aval, letter of intent, independent guarantee).
. This was in addition to a $850 million bond
A bond is a stake in a debt issued by a company or governmental body. The holder of the bond, the creditor, is entitled to interest and reimbursement of the principal. If the company is listed, the holder can also sell the bond on a stock-exchange.
issuance arranged by Credit Suisse and VTB to another company, on which the interest payment is due on 18 January (following a restructuring of payments which took place in 2016). None of the loans were approved by the Mozambique parliament, breaching the country’s constitution.
The debts, alongside falling prices for Mozambique’s commodity exports and the high value of the dollar, have created a debt crisis in Mozambique. It is suspected that Credit Suisse and VTB have sold on most, if not all, of the loans. The Paris Club Paris Club This group of lender States was founded in 1956 and specializes in dealing with non-payment by developing countries.
http://clubdeparis.org group of western government creditors met on 12 January to discuss Mozambique’s debt crisis. The Financial Conduct Authority in the UK has been reported to be investigating both Credit Suisse and VTB.
Mozambique’s crisis highlights the major lack of transparency around lending to governments by UK-based banks and financial institutions. Jubilee Debt Campaign are also demanding that the UK government bring in new regulations requiring all loans issued to governments or with government guarantees under English law to be publicly disclosed at the time they are given.
Both Credit Suisse and VTB have failed to respond to Jubilee Debt Campaign.
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