Africa-Press – Mozambique. Mozambique’s public debt stock fell to 91% of gross domestic product (GDP) in 2024 due to out-of-court settlements in the country’s ‘hidden debts’ case, according to rating agency Fitch.
“Mozambique’s government debt fell to 91% of GDP in 2024 from 97.7% in 2023, mostly reflecting the out-of-court settlements pertaining to the ‘hidden-debt’ scandal,” Fitch reports. The agency expects government debt to increase and stabilise at about 92% of GDP through 2026 and 2027, according to its most recent rating assessment of the country.
In this August assessment, in which it maintained Mozambique’s February rating of CCC- the last level before Financial Default – Fitch admits a slight increase in the weight of the public debt stock until next year: “It will reflect the fiscal deficits and the increase in the liabilities of the National Hydrocarbons Company associated with Area 1 [natural gas production], only partially offset by nominal GDP growth.”
The International Monetary Fund (IMF) estimated last year that the costs of Mozambique’s new agreements with banks to resolve the hidden debt controversy would amount to 1% of GDP.
Almost 10 years after they were disclosed, the IMF described in the final report of the fourth review of the Extended Credit Facility (ECF), completed in July of last year, that the ‘hidden debts’ continued to be a source of pressure on Mozambique’s public finances.
“Mozambique reached an agreement with creditors to settle the remaining outstanding amounts of the debt disclosed in 2015. The agreement covers approximately US$648 million of outstanding principal, with total liabilities including interest of US$1.4 billion, and involves a payment of US$220 million (1% of GDP) in 2024,” reads the IMF statement published by Lusa at the time.
The Mozambican government announced a new out-of-court settlement a year ago – following another reached in 2023 – with three more banks, including Portuguese BCP bank. The agreement envisages reducing the “state’s exposure” from US$1.4 billion to US$220 million, an 84% reduction in the banks’ total claims and 66% of their capital.
The hidden debt scandal dates back to 2013 and 2014, when then-Finance Minister Manuel Chang, who was arrested and convicted in the United States, approved, without parliament’s knowledge, state guarantees on loans from Proinducus, Ematum, and MAM to Credit Suisse and VTB banks.
Disclosed in 2016, the debts were estimated at approximately US$2.7 billion, according to figures presented by the Mozambican Public Prosecutor’s Office.
In April of this year, Privinvest was authorized by the British Court of Appeal to appeal the ruling on the case, which ordered the shipbuilding group to pay Mozambique approximately €1.65 billion in compensation.
In its appeal, filed in December 2024, Privinvest cited Mozambique’s failure to disclose documents related to the case and also complained that failures by the Mozambican Attorney General’s Office prevented it from proving that the alleged bribes to former Finance Minister Manuel Chang were merely “joint investments in a sovereign wealth fund or bank”.
In the ruling issued in July of last year at the London Commercial Court, the shipping group was ordered to pay approximately US$1.9 billion (€1.65 billion at current exchange rates) in compensation and denied Privinvest’s appeal.
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