Matthias Goldmann (Max Planck Institute for Comparative Public Law and International Law; Leibniz Institute for Financial Research SAFE; Goethe University Frankfurt – Cluster of Excellence Normative Orders; Goethe University Frankfurt) has posted The Law and Political Economy of Mozambique’s Odious Debt on SSRN. Here is the abstract:
The thesis of this paper is a very simple one. Mozambique should not repay the loans which three of its state-owned enterprises took out in 2013-2014 in the context of a gigantic scheme of corruption. I will provide two types of reasons for this conclusion. The first type is rather legal and straightforward. Debts incurred due to corruption and in violation of the constitution do not need to be repaid. The second type is of a more contextual character. While the loans in question are void as a matter of law, they reveal certain characteristic traits of our current worldwide financial system, which I believe must be changed. An oversupply of liquidity in capital-rich countries may have devastating effects for capital-importing, developing countries. Not the interest of creditors, but the needs of lenders should determine sovereign lending. The current legal order governing sovereign debts needs to be adjusted to this end.