QUESTIONER: Good morning. The finance ministers of the EU announced sanctions on Spain and Portugal for violating rules and budget deficit targets. So how do you see, how does IMF see those sanctions on Portugal and which implications it might have for this country? OECD said the sanctions on both countries were the last thing Europe needed after Brexit, so I just wanted to have some comments from you on this.
It seems you have an update on Guinea-Bissau if you could give some considerations in case you do? There was a remaining installment of €9 million to be paid this year. In case you got any information?
And on Mozambique, it has been on the news that the financial aid by the IMF might not happen this year, and I would like to confirm that with you. In Angola, I just wanted to ask, in case you have some follow up…
MR. RICE: A whole press conference in itself. Well, thank you. Let me try and give you something on each of those. On Portugal, look, on the issue of sanctions, that’s clearly for the European Commission to propose sanctions if that’s what they do. My understanding is, that would happen within the next 20 days or so, so that’s not an issue for the IMF. It’s for the Commission, so you might want to ask them about that.
On Guinea-Bissau, thanks for the question, seriously. It’s good to talk about other countries about important issues. What I can tell you is the IMF’s Extended Credit Facility program with Guinea-Bissau is off track as a result of two expansive bank bail-outs that violate the end December 2015 net credit to government performance criteria.
This also prompted development partners, including the World Bank, the African Development Bank, and the EU to hold their budget support. I can tell you that in an effort to bring the program back on track, the new government which, as you know, has been in place since last month, declared the bail-outs to be null and void, and, you know, we continue in that context to provide policy advice and technical assistance, and continue the discussions with the new government.
On Angola, we talked a bit about it two weeks ago in your absence, but I think it’s been reported that the government of Angola has decided to continue their close policy dialogue with the Fund only in the context of the Article IV consultation, and not through discussions concerning an EFF supported program. So, again, we continue to work. We stay engaged, but it’s not on discussions on a financial program.
Then on Mozambique, again, we’ve discussed it quite a bit here. We had a mission in Maputo ending toward the end of June. That was the fact finding process related to the previously undisclosed borrowing, and to assess the macroeconomic situation. We welcomed the government’s investigation into this previously undisclosed debt. We thought that was important.
Additionally, the staff mission said that further measures are needed. In particular, we felt that an international and independent audit would be needed. That’s of Ematum, Proindicus, and MAM companies. The latter two being the companies that received the funding under the previously undisclosed loans. We did issue a press statement on all of this, so it’s all public.
Our understanding is at this stage the government is not ready to move forward with the audit. That’s kind of where we stand. So the review with the Fund has not been completed, and, of course, for any disbursement that review would need to be completed.
QUESTIONER: On Portugal you’re telling me you don’t have any comments on the sanctions? Because if just released, the Article IV June 30 --
MR. RICE: We did. That’s right.
QUESTIONER: -- so how do you see those sanctions? No comments on that? Aren’t you worried?
MR. RICE: We just released the Article IV consultation report a few days ago on Portugal, so I’m going to let that speak for itself. It was pretty comprehensively covered and I’ll leave it there.
