World Bank and China remained Mozambique’s biggest creditors in 2021

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World Bank and China remained Mozambique’s biggest creditors in 2021

1:53 CAT | 17 May 2022

File photo: Folha de Maputo

The most recent MEF Public Debt Report states that, last year, these partners continued to accumulate a large part of the external public debt stock.

Published a few days ago by the Ministry of Economy and Finance (MEF), the Public Debt Report indicates that, at the end of the 2021 financial year, the stock of external public debt stood at US$10.4 billion, of which US$5 billion (48% of the total) was held by multilateral creditors; US$4.5 billion (43%) is related to bilateral creditors, and US$900 million (9% of the total) is held by the MOZAM 2032 bond creditors syndicate, i.e. debt of the Mozambican Tuna Company (EMATUM ), a “daughter” of the “hidden debts” scandal.

“In individual terms, the Central Government’s external debt continues to be mostly held by the same group of six creditors, with emphasis on China and the World Bank, whose weight in the composition of the external portfolio remained practically unchanged,” the MEF report reads.

The report illustrates that, of the total external debt valued at US$10.4 billion, the World Bank has a share of 30%, followed by “Other” creditors with 24%, China with 19%, the African Development Bank (AfDB) with 9%, creditors with EMATUM debt 9%, Portugal with 5% and Japan with 4%.

“Although a diversified portfolio in terms of sources is in principle more desirable as it avoids excessive exposure to a specific creditor, the significant dependence of the state on World Bank financing does not necessarily represent a vulnerability, as the predominant concept of most of this creditor’s loans is associated with a positive effect on the general cost and risk profile of the Central Government’s debt,” the report explains.

Overall, public debt grew from US$12.9 billion at the end of 2020 to US$13.9 billion last year (an increase of 8%).

The report also reveals that current public debt represents 78% of the country’s gross domestic product; that is, more than half of Mozambique’s current wealth.

By Evaristo Chilingue

Source: Carta de Moçambique