Mozambique buys back entire trade debt

12 October 2007

Maputo, Mozambique, 12 Oct – Mozambique has paid off the remainder of its trade debt totalling US$153.2 million, Michael Baxter of the World Bank said, cited by Mozambican newspaper Notícias.

According to the World Bank regional director for Angola, Malawi, Mozambique, Zambia and Zimbabwe, the payment was made by Mozambique buying back the debt at just 9 cents per dollar.

Mozambique took on the debt in the 1970s and 80s to finance imports by state companies, but the debt was never serviced.

The buy back operation was entirely financed by a US$13.8 million donation from Norway, as part of the World Bank Group’s Debt Reduction Facility.

The operation is part of the strategy for the country’s foreign debt management, which includes other similar actions, such as the Initiative for Highly Indebted Poor Countries (HIPC), the Multilateral Debt Reduction Initiative (MDRI) and Paris Club agreements.

According to the World Bank, “this move is the result of the country’s coherent macroeconomic policies and commitment of the Norwegian government and this world financial institution to supporting Mozambique’s economic development,” Baxter said. (macauhub)