Answering a question from the opposition Renamo-Electoral Union coalition on the country's debt, Chang said that by 1998 Mozambique's debt stock had reached six billion dollars, in nominal terms.
Then came the two phases of the Heavily Indebted Poor Countries (HIPC) debt relief initiative, which cut the Mozambican debt to 4.6 billion dollars by the end of 2005.
Thanks to HIPC, the annual servicing of the Mozambican debt fell from over 100 million dollars to about 57 million.
Chang warned that nobody should imagine that HIPC cancelled all of Mozambique's bilateral debt. Far from it - for instance, HIPC-1 had a cut-off date of February 1984. Any debts contracted after that date were not covered.
"Furthermore, in the treatment of debt relief, cancellation may be implemented on the dates of debt service payment", said Chang, "and so the reduction in the debt stock could take years".
In 2005, under pressure from the G-8 group of most industrialised nations, the IMF, the World Bank and the African Development Bank (ADB) agreed to cancel the debts of the poorest countries.
Under this Multilateral Debt Relief Initiative (MDRI), the IMF cancelled the entirely of the debt owed by Mozambique up to 31 December 2005, which amounted to 154 million dollars. Using the same cut-off date, the ADB cancelled 500 million dollars of debt.
The World Bank adopted a different procedure. It used 31 December 2003 as the cut-off date, and although the full amount involved is 1.3 billion dollars, the Bank is cancelling it year by year - thus in 2006 only 255 million dollars of Mozambique's debt to the World Bank was cancelled.
The savings from debt relief have been used in the government's development programmes, said Chang. They have allowed a 65 per cent increase "in the allocation of resources to the social sectors with a direct impact on poverty reduction".
Contrary to Renamo's claims, Mozambique is no longer a "heavily indebted" country, the Minister continued. At least, using the key HIPC ratios (the debt stock to GDP ratio, and the debt service to exports ratio), Mozambique has ceased to meet the definition of "heavily indebted".
Chang pledged that the government will continue "to keep the debt sustainable, with a reasonable level of debt servicing, in line with the capacities of our budget".
In seeking foreign aid, the government would prioritise grants first, and then highly concessional loans. But these soft loans remained essential, and so the government would continue to contract further debts.
Turning to domestic indebtedness, Chang said this was "a fundamental instrument for financing the budget deficit, for supporting monetary policy and for developing the financial sector".
The domestic debt takes the form of treasury bonds. As of 31 December 2006, the stock of treasury bonds was 5.2 billion meticais (about 201 million dollars). Chang stressed that the government is scrupulously complying with its obligation to service these debts.
SOURCE: AIM
