Mozambique’s secret debt: the impact on the structure of the debt and the economic consequence
Before the recent revelations about the secret debt, the Mozambican public debt had already been growing exponentially. Excluding the secret debt, between 2006 and 2015 the total public debt tripled, from US$ 3.5 billion to more than US$ 10 billion. The commercial debt increased eightfold, from US$ 300 million to US$ 2.4 billion. The engine for the growth of the public debt was the commercial debt (more expensive, shorter term, and more difficult to renegotiate), which grew 13 times more quickly than the GDP and reached 34% of the total public debt, In 2015, the non-secret debt was already 67% of GDP (compared with 39% in 2008), clearly beyond the limits of macro-economic sustainability. The secret loans amplified a problem.
IESE wrote 5 IDeIAS about this issue: IDeIAS 85e – Introduction to the public debt problematic: context and immediate questions (pdf), IDeIAS 86e – Mozambique´s Secret Debt: The Impact on the Structure of the Debt and the Economic Consequences(pdf), IDeIAS 87e – Refuting Myths in the Debate about the Public Debt in Mozambique (pdf), IDeIAS 88e – Cenarios, Options and Policy Dilemmas faced with the Bursting of the Economic Bubble (pdf), IDeIAS 89e – Chronic of a Crisis Foretold in Advance: Public Debt in the Context of the Extractive Economy (pdf)