The government's sale of Mozambique Airlines (LAM) to the State Enterprise Sector (SEE) could increase fiscal risk and contribute to an increase in the lack of transparency in the management of public affairs, according to the Center for Public Integrity (CIP).

Government authorizes HCB, CFM and EMOSE to acquire 91% of state shares in LAM

For CIP, the companies nominated to buy 91% of the state's shares in LAM could be affected by the operational and financial crisis that was once restricted to LAM.

"The measure transfers the financial burden of a company in difficulty to other state entities, which could increase the fiscal risk for the state itself," reads a CIP analysis.

With the sale of the shares, the government intends to raise around 130 million dollars to buy aircraft and ensure that LAM has its own fleet and stops spending on chartered planes.

However, the civil society organization believes that while the measure may provide immediate financial relief for the company, it actually reflects the government's inability to guarantee its long-term sustainability.

In the document, the CIP recalls that LAM is one of the companies that represent a "high fiscal risk" for the Mozambican state, along with Moçambique Telecom S.A. (TMCEL), Petróleos de Moçambique S.A. (PETROMOC), Televisão Baixo Limpopo E.P. (TVM), Silos e Terminal Granarheiro Matola S.A. (RBL), Mozambique Telecom S.A. (PETROMOC), Televisão de Moçambique E.P. (TVM), Regadio de Baixo Limpopo E.P. (RBL), Silos e Terminal de Graneleiro da Matola S.A. (STEMA), TRANSMARÍTIMA S.A. and Empresa Moçambicana de Pesca S.A. (EMOPESCA).

LAM represents a high fiscal risk as it is constantly dependent on state resources without making any financial contribution. The companies HCB, CFM and EMOSE stand out for their positive net results and for contributing to the state by paying dividends and taxes.

"The new proposal, which foresees the withdrawal of the state as an intermediary, represents a risk. The companies acquiring shares in LAM will be able to make transfers without proper public scrutiny, as is the case with the State Budget, reducing the transparency of the process. In addition, the proposed model forces the buying companies to direct resources towards revitalizing LAM instead of investing in strategic projects within their areas of operation, which could compromise their profitability" writes the IPC.