Government of Mozambique publishes leaflet explaining public debt

5 March 2019

The Mozambican government will continue negotiations for the conclusion of the so-called hidden debts process that has been ongoing since 2016, according to a leaflet posted on the Ministry of Economy and Finance website.

The leaflet, two A4 sheets with three columns each, summarises the position of the Mozambican government on the US$2 billion taken on through a bond issue and two loans, which remain unpaid.

Saying that the government is following the latest developments in the area of national and international justice on the issue, the brochure concludes with the statement that “these negotiations are very important for the reinsertion of Mozambique into the international financial market and to strengthen the confidence of economic agents.”

Following the discovery of the hidden debts by the Wall Street Journal, the International Monetary Fund (IMF) suspended a financial aid programme to Mozambique, along with other countries and multilateral organisations that provided direct support to the country’s State Budget.

In relation to the question of whether the Mozambican State should pay that sovereign and guaranteed debt, the authors of the leaflet referred to an article that regulates the State Financial Administration System, which stipulates that the State is liable for acts committed by its officials and agents.

Last February, the Mozambican government filed a lawsuit in London against investment bank Credit Suisse for what became known as the “tuna bond” scandal, a eurobond issue to finance the state tuna fishing company Empresa Moçambicana de Atum.

Credit Suisse was, along with Russian bank VTB, one of the banks that set up the bond issue and the two loans that pushed Mozambique into a financial crisis that was unprecedented since independence.

The document said that the Mozambican state has debts of US$13.4 billion, of which US$11.2 billion in foreign debt and the remaining US$2.2 billion in domestic debt. (Macauhub)