Maputo, Aug. 4, 2025 (Lusa) - 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.
"Reflecting mainly the out-of-court settlements related to the “hidden debt scandal”. Fitch expects public debt to increase and stabilise at around 92% of GDP by 2026 and 2027," the agency said in its latest rating assessment of the country, recalling that Mozambique's public debt stood at 97.7% of GDP in 2023, according to information consulted on Monday by Lusa.
In this August assessment, which maintained its February rating of CCC - the last level before Financial Default - for Mozambique, Fitch admits a slight increase in the weight of public debt until next year: “This will reflect fiscal deficits and the increase in liabilities of the National Hydrocarbons Company associated with Area 1 [natural gas production], only partially offset by nominal GDP growth.”
Last year, the International Monetary Fund (IMF) estimated that the costs of Mozambique's new agreements with banks to resolve the 'hidden debts' controversy would amount to 1% of Gross Domestic Product (GDP).
Almost 10 years after they were revealed, the IMF described in its final report on the fourth review of the Extended Credit Facility (ECF) programme, completed in July last year, that hidden debts continued to be a source of pressure on Mozambique's public finances.
"Mozambique has reached agreement with creditors to settle the remaining outstanding amounts of the debts disclosed in 2015. The agreement covers approximately US$648 million [€559.1 million] of outstanding principal (with total liabilities including interest of US$1.4 billion [€1.207 billion]) and involves a payment of US$220 million [€190 million] (1% of GDP) in 2024," according to the IMF report, reported at the time by Lusa.
The Mozambican government announced a new out-of-court settlement a year ago - after another one reached in 2023 with three more banks, including Portugal's BCP, in the London dispute over the 'hidden debts' scandal, providing for a reduction in the "state's exposure" from US$1.4 billion to US$220 million, a cut of 84% of the banks' total claim and 66% of the capital.
The 'hidden debts' scandal dates back to 2013 and 2014, when the then minister of finance, Manuel Chang, who was arrested in South Africa and convicted in the United States, approved, without parliamentary approval, state guarantees on loans from Proinducus, Ematum and MAM to Credit Suisse and VTB banks.
Discovered in 2016, the debts were estimated at around US$2.7 billion (€2.33 billion), according to figures presented by the Mozambican public prosecutor's office.
Privinvest was authorised in April this year by the British Court of Appeal to appeal the ruling on the “hidden debts” case, which ordered the shipbuilding group to compensate Mozambique for around €1.65 billion.
In its appeal, filed in December 2024,
Privinvest invoked Mozambique's failure to comply with its obligation 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 investment fund or bank”.
In the judgment handed down in July last year by the London Commercial Court, the shipping group was ordered to pay approximately US$1.9 billion (€1.65 billion at the current exchange rate) in compensation and Privinvest's appeal was dismissed.
The case, which became known as the ‘hidden debts’ scandal, plunged Mozambique into a financial crisis.
PVJ/AYLS // AYLS
Lusa
