State guarantee of Mozambican tuna company declared unconstitutional

5 June 2019

The State guarantee granted to the debt taken on by the Mozambican Tuna Company (Ematum) was declared unconstitutional by Mozambique’s Constitutional Council, according to an official statement released on Tuesday in Maputo.

The state-owned company controlled by the State Information and Security Service in 2013 took on a loan of US$850 million by issuing eurobonds, in an operation set up by banks Credit Suisse and Russia’s VTB, to buy fishing boats and other equipment.

The Constitutional Council addressed the requests made by several non-governmental organisations in Mozambique, which called for an assessment and declaration of unconstitutionality of a rule contained in the resolution that approved the General State Account for 2014 and made the guarantee granted to that debt issue official.

The petitioners argued that the guarantee did not comply with the General State Budget Law for 2013 which stipulated a maximum value of 183.5 million meticais (about US$5 million dollars at the time) for State guarantees, among other considerations.

The Ministry of Economy and Finance announced last Friday that it had reached an agreement of principle on “the main business terms of a projected restructuring operation of Mozambican Bills of US$726.524 million at the rate of 10.5% with maturity in 2023,” with members of the Global Group of Mozambique Bondholders (GGMB).

The ministry also said that the agreement of principles now announced replaces in full the one announced in November 2018, the main change being that the new one will not include value recovery instruments related to tax recoveries of Area 1 and Area 4 gas projects in Mozambique. (Macauhub)