Donors tell Mozambique to preserve peace like "treasure"

Reuters

* Urge dialogue to end political tension, violence

* Request for information about debut dollar bond

* Government says committed to fighting poverty

By Manuel Mucari

MAPUTO, Nov 14 (Reuters) - Foreign donors urged Mozambiqueon Thursday to preserve peace like "a treasure" after anincrease in political violence, and they questioned agovernment-guaranteed $850 million debut bond issue that hasraised concerns over financial transparency.

Since April, Renamo opposition guerrillas have stagedsporadic attacks and clashed with government forces mostly inthe centre of the southern African nation, following two decadesof peace after a devastating 1975-1992 civil war.

The threat of fresh conflict, along with a spate ofkidnappings in Maputo and other cities, has alarmed donors andinvestors in Mozambique who are developing some of the world'slargest untapped reserves of coal and gas.

The IMF sees Mozambique's economic growth accelerating to8.3 percent next year from 7 percent this year, boosted byincreased business including operations by mining and energycompanies like Brazil's Vale, Rio Tinto, U.S.oil company Anadarko and Italian group Eni.

But there are fears the multi-billion dollar resourceinvestment boom in what is still one of the world's pooreststates could be derailed by attacks by Renamo, the mainopposition party and former rebel group which accuses PresidentArmando Guebuza of monopolising economic and political power.

Renamo, whose leader Afonso Dhlakama is on the run from thearmy in the bush, is boycotting municipal elections next week.

Speaking on behalf of foreign donors after meeting with thegovernment, Italy's ambassador Roberto Vellano said the talksfocused on management of public finances, ways of improving thebusiness climate and applying anti-corruption laws.

Vellano said Mozambique was "living a political moment thatrequires more than ever the gifts of dialogue and defending thepeace which have characterised its recent history".

He called this peace "a treasure to be preserved" which hesaid was essential for economic growth and fighting poverty.

REQUEST FOR TRANSPARENCY

The ambassador said donor governments in the so-called G19donors' group, which include Britain and other European states,wanted Mozambique to provide more information on the recent bondissue by EMATUM, a new state company which is buyingFrench-built tuna fishing boats and coastal patrol vessels.

The issue totalling $850 million has puzzled some investorsand analysts, who have questioned the destination of the fundsand asked why the money was not going towards more conventionalprojects in road, power or transport sectors.

"We recognise that Mozambique needs coastal protection, butfor the donors who are providing budget support who see theircore business as fighting poverty, this doesn't quite seem to begoing in that direction," one donor country diplomat, who askednot to be named, said.

The Mozambican state effectively controls more than 86percent of EMATUM, created in August this year, through stakesheld by state entities that include an investment company, GIPS,controlled by the Mozambican intelligence services.

Last month, an International Monetary Fund team visited thecountry and its report said Mozambique should make sure that thenew tuna company's non-commercial activities are reflected inthe government's budget and accounts next year.

Vellano said more information from the government would helprespond to donors' concerns over the financial operation "in aspirit of openness and transparency".

Responding to journalists' questions after the meeting withthe donors, Planning and Development Minister Aiuba Cuereneiasaid his ministry was working with the finance ministry toinclude EMATUM's non-commercial spending activities in the 2014budget. But he gave no details.

Cuereneia said the government was committed to economicgrowth and stability and fighting poverty.

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