China is the biggest beneficiary of the external debt service and there is no public information to justify the size of the debt
The application of less stringent criteria for the granting of loans by China, influenced this country to become a prominent player in the range of financing options for the country after it triggered the hidden debt crisis in 2016 and the members of the Club Paris practically closed to Mozambique.
However, this trend did not start in 2016. It worsened after that year. For example, Mozambique's debt with China in 2010 only totaled USD 45 million but started to grow exponentially in the following years (in 2011 alone it grew by 415.8%). In December 2018, the debt with China reached a peak of USD 2.15 billion, an increase of almost 50 times compared to 2010. In the first quarter of 2020, the debt had a balance of USD 2.01 billion, representing 20.2% of Mozambique's total external debt and 13.2% of 2019 GDP.
It so happens that there is no satisfactory public information on loans taken out (feasibility studies) to justify the size of the debt with China due to inconsistencies and lack of transparency in budget documents, as detailed below. Currently, China is the biggest bilateral creditor and also the biggest beneficiary of the external debt service included in the state budgets. In the first quarter of 2020, of the 44.52 million dollars of bilateral external capital repayment, about 82.61 TP1T were paid to China, which leads to the conclusion that these debts affect the availability of State Budget resources to face the challenges posed by the pandemic.
The fact is that, currently, in the context of COVID-19, investment options taken in the past with China's resources, despite having previously contributed to the Gross Domestic Product, have had little impact for the country. That is why large social investments are currently needed to face the various challenges posed by the pandemic.
