How to stop governments borrowing behind their people's backs
In 2016 the government of Mozambique confessed to secret debts of $1.4bn, or 11% of GDP,
mostly as loan guarantees for statebacked companies.
Growth faltered, the currency slumped and foreign donors pulled back.
The results have been "devastating", says Denise Namburete, a civilsociety activist,
describing health centres that have gone two years without medicines.
American prosecutors are pursuing eight people involved in the scandal,
including three foreign bankers and a former finance minister, on charges of moneylaundering and fraud.
The Mozambique case may be unusual—or not.
Even the IMF is scratching its head about how much governments truly owe.
In some places the mystery is loans from China and other emerging lenders.
In others it is advance payments from oil traders, liabilities from public-private partnerships or hidden loans from commercial banks.
The Institute of International Finance (IIF), a group of banks and financial institutions,
has responded to mounting concern by drafting principles on debt transparency.
Finance ministers of G20 countries endorsed them at a summit in Fukuoka, in Japan, on June 8th-9th.
The IIF principles are voluntary and would apply only to lending from the private sector, not from states.
Lenders would disclose any loans they make to low-income governments or state firms within 60-120 days of funds being released.
Details would include the loan's purpose and structure, and a range within which the interest rate falls.
The data would be held by an international institution, perhaps the IMF or World Bank.