Recent loans have hurt the government but have benefited players inside and outside of Mozambique, says Jose Ivo Correia, Researcher at Centro de Estudos Moçambicanos e Internacionais.
Acquiring debt is not necessarily a bad policy. Most of Mozambique's recently acquired debt was supposed to help set up a productive base, to diversify the economy and to promote economic linkages in the country, rather than promoting private interests, financial speculation and real-estate rent seeking.
other questions are being asked such as where did the money go
Three-quarters of Mozambique's debt has been allocated to the $850m bond for a tuna-fishing company and defence equipment, $725m for the Maputo-Catembe bridge leading to a remote area and a $300m contract for digital migration awarded to StarTimes, a company headed by the former president's daughter, Valentina Guebuza.
But what about the role of Credit Suisse in the fishy deal that will cost hundreds of millions of Mozambican tax revenue to repay?
Credit Suisse raised a $500m bond for a month-old state-owned tuna-fishing company with no declared board of directors or established premises at the time.
Despite concerns about transparency, the Swiss bank went ahead with the deal, as a state guarantee made the bond without strings attractive. The bond was oversubscribed, and Russian bank VTB raised a further $350m.
Credit Suisse told Bloomberg in 2014 that "there are no weapons or combat systems of any kind" in the deal. Today, revelations suggest that most of the tuna money went for defence equipment instead of the promised fishing vessels.
As the tuna company looks likely to default, finance minister Adriano Maleiane has come forward proposing a restructuring of the interest rates and repayment dates, but other questions are being asked such as where did the money go, who should be prosecuted and what role Credit Suisse and the backers of the tuna bond played. ●