Donors urge Moz to preserve peace

Italy says more info from the government would help respond to donor concerns.

President of the Republic of Mozambique Armando Gebuza. Picture: EWN.

MAPUTO - Foreign donors urged Mozambique on Thursday to preserve peace like 'a treasure' after an increase in political violence. They also questioned a government-guaranteed $850 million debut bond issue that has raised concerns over financial transparency.

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

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

The International Monetary Fund (IMF) sees Mozambique's economic growth accelerating to 8.3 percent next year from 7 percent this year, boosted by increased business including operations by mining and energy companies like Brazil's Vale, Rio Tinto, US oil company Anadarko and Italian group Eni.

But there are fears the multi-billion dollar resource investment boom in what is still one of the world's poorest states could be derailed by attacks by Renamo, the main opposition party and former rebel group which accuses President Armando Guebuza of monopolising economic and political power.

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

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

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

He called this peace 'a treasure to be preserved' which he said was essential for economic growth and fighting poverty.

"We recognise that Mozambique needs coastal protection, but for the donors who are providing budget support who see their core business as fighting poverty, this doesn't quite seem to be going in that direction," said one donor country diplomat, who asked not to be named.

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

Last month, an IMF team visited the country and its report said Mozambique should make sure that the new tuna company's non-commercial activities are reflected in the government's budget and accounts next year.

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

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