Improving Public Debt Management
In the OIC Member Countries
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B) Public Debt ManagementGovernance and Strategy Development
Legal frameworkThe parliament authorizes the Ministry of Economy and Finance (MoEF) for borrowings and
giving loan guarantees on behalf of the government by the annual approval of the state budget.
Thereupon, the Cabinet Council develops the specific debt management strategy considering
the tradeoffs between expected cost, risks and other constraints. The Public Debt Unit (PDU)
is responsible for executing the implemented strategy and reporting back to the Cabinet
Council, which in turn reports back to parliament.
Managerial structure (incl. coordination with other policies)After the DeMPA in 2008 (see World Bank 2008), Mozambique created a Public Debt
Management Office (MEFMI 2016) and designed a general institutional framework. Most
importantly, the debt management functions were shifted from the central bank to the MoEF.
Today, the PDU, which is the main institution responsible for public debt management, is
located within the National Directorate of Treasury at the MoEF. The PDU consists of three
departments: The Loans Department, the Debt Strategic Planning Department and the
Recording and Debt Service Department. Other institutions integrated in the debt management
process are the National Directorate of Budget, the National Directorate of Public
Accountability, the Mozambique Stock Exchange, the Ministry of Planning and Development
and the Bank of Mozambique (Banco de Moçambique) (OECD 2014). The Bank of Mozambique
serves as the government’s agent in the debt issuance process (AFMI 2016).
In order to strengthen its debt management capacity further, the MoEF requested the
Macroeconomic and Financial Management Institute of Eastern and Southern Africa (MEFMI)
Secretariat for technical assistance for training staff in public debt management. A MEFMI
team visited Mozambique in August 2016 to conduct workshops on “Foundations of Debt
Management and Debt Management Performance Assessment (DeMPA)” (MEFMI 2016).
Debt reportingThe MoEF publishes annual debt reports, which include a cost and risk analysis of the public
debt portfolio (IMF 2015b). Mozambique’s debt sustainability analysis, the quality of debt
recording and reporting, and the systems for contracting loans and issuance of guarantees
were evaluated within a Public Expenditure & Financial Accountability (PEFA) Assessment in
2015 and received a good ranking grade (PEFA 2015). At that time, however, the hidden debt
guarantees by the government had not yet been disclosed. Official documents do not include
consistent information or analyses on contingent liabilities. Specific risk types, including risks
from contingent liabilities, risks related to government’s assets and liabilities, interest and
exchange rate risks as well as environmental risks, are considered in recent fiscal reports but
not fully quantified (IMF 2015a).
Debt management strategy (incl. risk management)Mozambique created its first MediumTerm Debt Management Strategy (MTDS) for the years
20122015. Objectives of the MTDS were (MoEF 2012, pp. 1213):
 Financing the activities of the government via credits;
 Ensuring debt service at the lowest possible cost consistent with minimizing risk;
 Maintaining debt sustainability over time;