I appreciate the concerns you raise about several loans to Mozambique from two London-based banks. As the Jubilee Debt Campaign notes, a recent audit of the loans appears to raise a number of questions, including a lack of evidence that they had been used for their stated purposes. As you note, while the loans were given government guarantees by senior officials of the Mozambique government, they were not approved by the Mozambique parliament. I know that campaigners in Mozambique argue that the loans therefore violate the country’s constitution and are calling for the current government of Mozambique to repudiate the loans.
However, I understand that the Mozambique loans are owed under UK law. This means that any legal dispute about their payment would be heard in London courts. Furthermore, according to the Jubilee Debt Campaign over 90% of debts from private lenders to governments in sub-Saharan Africa are also owed under UK law. I therefore agree that this makes this an important issue for the UK more widely.
I also note your concerns about so-called “vulture funds” – institutions that buy developing countries’ sovereign debt at discounted prices, then seek to recover its full value through legal action. I welcome that the Debt Relief (Developing Countries) Act 2010 limits the amount that such funds can recover from countries designated as having unsustainable external debts. However, I appreciate the Jubilee Debt Campaign’s call that the Act be strengthened to ensure that vulture funds cannot ignore agreed debt restructuring in pursuit of large profits in UK courts. I believe it is important that the Government consider what action it can take to prevent debt crises taking place in developing countries, including supporting global negotiations on new international bankruptcy rules.
I have written to the Chancellor to ask if he can push the G20 Summit to commit to make all loans by governments and multilateral institutions public at the time they are given, and if they can pass mandatory rules, in alliance with other financial centres, to require all UK-based companies, and all loans given under UK law, to be publicly disclosed when they are given. As soon as I have received a response I will provide an update. However, I can assure you that I will continue to monitor this issue.