Good afternoon. The Mozambican government has run up $1.8bn worth of “hidden debt” since 2005, weekly newspaper Savana reports today, in undeclared borrowing from the Bank of Mozambique. Is Mozambique facing another financial scandal and, perhaps, an economic crash?
The auditor’s report on the Bank of Mozambique’s financial results for 2024, published last week, points out that the Mozambican state has not issued debt instruments to the central bank in return for financing over the last 20 years totalling MZN115bn ($1.8bn), plus interest of MZN28bn ($438m).
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The suggestion is that had it done so, the government’s internal debt would by now be MZN143bn ($2.2bn) higher than it currently appears — and even the current figure is causing widespread alarm. Surely the state is now completely bankrupt?
Well, no. Somehow, the government has managed to repay or renegotiate its debts without messy defaults, and there has been no economic and financial crisis comparable to that which followed the discovery of $2bn in foreign debt in 2016. Nor should we expect one.
