The Mozambican government has hired US-based consulting firm Alvarez & Marsal (A&M) to support its public debt management strategy through 2029. The goal is to ease financial pressure, improve relations with creditors, and restore credibility. However, the outcome will depend less on the consultant’s reputation and more on the government’s ability to implement difficult reforms.
The decision to bring in A&M signals that Mozambique’s debt challenge can no longer be treated as a purely administrative issue. The country continues to face significant pressure on public finances, still dealing with the aftermath of the hidden debt scandal, limited fiscal space, and restricted access to international financing.
According to publicly available information, the firm will assist in implementing the 2025–2029 debt management strategy, including restructuring efforts, creditor negotiations, and improving the risk profile of the state’s debt portfolio. In practical terms, this may involve technical support to extend maturities, reduce short-term debt servicing pressures, strengthen creditor engagement, and enhance the institutional capacity of the Ministry of Finance.
Who is Alvarez & Marsal?
Alvarez & Marsal is not a typical consulting firm focused on diagnostics and generic recommendations. Founded in 1983 in New York, it has built a global reputation in crisis, restructuring, and transformation scenarios — stepping in when traditional approaches fall short.
Its positioning is execution-driven: not just advising, but actively helping to reorganize assets, redesign financial structures, negotiate with creditors, and implement decisions on the ground. Over the decades, A&M has expanded globally, working across sectors such as banking, energy, industry, consumer markets, public administration, and financial restructuring.
More recently, the firm has strengthened its sovereign advisory practice, aimed at supporting countries facing debt, liquidity, and fiscal sustainability challenges.
This practice is led by Reza Baqir, former Governor of the State Bank of Pakistan and a former senior IMF official. According to A&M, Baqir previously led the IMF’s debt policy division and was involved in sovereign restructuring cases including Greece, Jamaica, and Ukraine, as well as negotiations within the Paris Club. While this does not guarantee success in Mozambique’s case, it highlights the firm’s direct experience with sovereign debt and multilateral creditors.
Why Did Mozambique Hire A&M?
The rationale appears straightforward: the government needs to improve how it manages a debt burden that continues to weigh heavily on public finances. The immediate goal is not to eliminate debt — which would be unrealistic — but to make it more manageable.
If the firm succeeds in helping extend maturities, smooth repayment schedules, improve financing conditions, and structure creditor dialogue more effectively, it could create fiscal breathing room. In theory, this would allow the government to ease pressure on public finances and protect spending in critical areas such as healthcare, education, and infrastructure.
There is also a reputational dimension. After years of declining trust, any sign of greater professionalism in debt management could help rebuild confidence among bilateral and multilateral creditors, as well as investors. In this sense, hiring A&M also sends a signal: Mozambique is attempting to address its challenges using more specialized tools.
What the Country Can Gain — and What It Should Not Expect
The potential benefits are real, but should be viewed realistically. A firm with international experience can bring three main advantages.
First, technical expertise. Debt restructuring requires analytical capacity, market knowledge, legal insight, and negotiation experience — a combination not always fully available within the public sector.
Second, institutional strengthening. If well executed, the engagement could leave behind improved processes, methodologies, and tools that enhance the Ministry of Finance’s long-term capabilities.
Third, external perception. A more credible and structured process may gradually improve the country’s risk profile.
However, there is a key limitation: no consulting firm can, on its own, resolve a structural public finance problem. A&M can help negotiate better, organize better, and inform better decisions — but it cannot replace fiscal discipline, expenditure control, revenue mobilization, transparency, or prudent risk management.
In other words, without consistent policy measures, the impact of the consultancy will inevitably be partial — helpful, but not transformative.
A Relevant but Not Miraculous Solution
It is important to separate expectations from reality. A&M can bring expertise, structure, and negotiation strength — all of which matter. But the success of the mandate will ultimately depend on the government’s political will to take difficult decisions and its consistency in implementing them.
In a country where public debt remains a sensitive issue, the involvement of an international consultancy may be seen as a positive and pragmatic step. Still, only tangible results — reduced financial pressure, better debt organization, improved predictability, and stronger institutions — will determine whether the initiative delivers real value or becomes just another costly attempt to manage a structural challenge.
At its core, Mozambique can benefit — but only if this engagement is used as a tool for structural reform, not a substitute for economic policy.
Cases That Illustrate the Firm’s Profile
Lehman Brothers (United States)
One of A&M’s most high-profile cases. Following the bank’s collapse, the firm was involved in asset management and restructuring efforts, helping maximize recoveries for creditors in a highly complex process.
Varig and Parmalat (Brazil)
In Brazil, A&M gained prominence through its role in corporate recovery and financial restructuring processes, including operational redesign, renegotiation, and asset rationalization.
Atento
The firm was involved in the company’s financial restructuring, supporting reorganization scenarios and creditor return assessments under significant financial pressure.
Public Sector and State Entities
A&M has also worked with public agencies, government programs, and state entities — particularly in the United States — focusing on financial stabilization, institutional restructuring, budget control, and operational efficiency. However, no direct equivalent case of a full sovereign debt restructuring is publicly known.
Source: Diário Económico
