FAQs on Mozambique public debt

The Mozambican government has published a leaflet explaining the hidden debts incurred between 2013 and 2014 that have led to the arrest of several figures on suspicion of corruption over the last two months.The brochure, in electronic form, is available on the Ministry of Economy and Finance (MEF) website and summarises the positions already taken publicly by the executive.

Alluding to negotiations with creditors, it states: “The Government is monitoring the latest developments in the area of national and international justice and, always protecting the interests of the State, will continue with the negotiations for the conclusion of the process that has been ongoing since 2016.”

“These negotiations are very important for the reinsertion of Mozambique into the international financial market and strengthening the confidence of economic agents,” the statement concludes.

The Mozambican Attorney General’s Office (PGR) has already gone beyond the position mentioned in the e-leaflet and on Wednesday asked the London Commercial Court to declare null and void part of the debt-related sovereign guarantees issued without the knowledge of the Mozambican parliament.Several analysts say the evidence allows Mozambique to free itself from obligations concerning more than half of the roughly US$2 billion in undeclared debt.The MEF leaflet details to the general public the known values of the guarantees issued to public maritime safety and maintenance companies Proindicus (US$597 million) and MAM (US$535 million) – the so-called syndicated and guaranteed debt, which remains unpaid.It also explains that the rest of the hidden debts (US$727 million) have been transformed into securities traded on the international markets under the name Mozam 2023, the nullity of which, therefore, it will be more difficult for Mozambique to argue.

Investors holding Mozam 2023 securities are not receiving the payments promised, which puts Mozambique at default – the lowest level of international credit ratings.As part of a judicial process concerning the ‘hidden debts’ initiated by US courts, former Mozambican finance minister Manuel Chang is due back in court in Johannesburg, South Africa, on Thursday [March 7], to hear a ruling on his extradition to the US on charges of fraud and money laundering.Westminster Magistrates Court in London has a hearing scheduled for Friday to examine the process of extradition of three former Credit Suisse bankers to the United States in the same case.