China strengthens its position as the largest bilateral creditor of Mozambique

10 February 2020

China continues to strengthen its position as the largest bilateral creditor of Mozambique and is expected to continue as such in the coming years, due to new credits being negotiated by the governments of the two countries, according to official figures.

The opinion of the Administrative Court of Mozambique on the General State Account (CGE) for 2018, released now, showed that debt to China rose by US$300 million between 2017 and 2018 when it totalled US$2.17 billion.

The increase, according to the Mozambican newspaper A Verdade, relates to borrowing during the last term of former President Armando Guebuza, namely the final portion of the Bank’s financing of exports and imports from China, amounting to 6.7 billion meticais (about US$105 million), for the construction of the Maputo-Catembe bridge and the Catembe/Belavista/ Ponta do Ouro road.

The value, according to the same source, does not include the new loans negotiated with China by President Filipe Nyusi.

The debt to China increased by almost US$800 million in the last four years and at the end of 2018 amounted to 39% of the external debt of Mozambique.

The value of the debt to China is twice the amount owed to the second-largest bilateral creditor, Portugal (609 million in 2018, 5.0% less than in the previous year).

Next on the list of Mozambique’s largest creditors is Japan (US$299 million, more than twice the figure recorded in 2017) and Libya (US$255 million).

China has increased its share of external trade in Mozambique, according to the Yearbook of the Mozambican National Statistics Institute, released in November 2019.

By value, China rose from third to the second-largest supplier to Mozambique in 2019 and was the origin of imports worth US$799.5 million, 11.5% of the Mozambican purchases abroad.

The main source of imports was South Africa, with US$1.9 billion, according to the same source.

Among the destinations of Mozambican exports in 2018, China appears in 4th place with US$239.5 million and the main destination was India, with US$1.37 billion, followed by the Netherlands and South Africa.

Mozambican exports to India are mainly coal, while for the Netherlands they are aluminium and to South Africa natural gas and electricity.

In terms of foreign trade, Mozambique’s balance of trade deficit increased from US$1.02 billion in 2017 to US$1.931 billion dollars in 2019, according to the INE. (macauhub)