Change of Mozambique’s status to middle income country to change way of obtaining loans

23 July 2010

Maputo, Mozambique, 23 July – Mozambique is “within a few years” of becoming a middle income country, a status which will mean the country will have to make use of non-subsidised loans, at market interest rates, the deputy finance minister, Pedro Couto said in Maputo Thursday.

On the sidelines of a meeting with the executive director of the IMF for Africa, Samuel Itam, who has been visiting Mozambique since Monday, the Mozambican deputy finance minister said that the country would have to take out non-subsidised loans taking into account the investment programmes that needed to be implemented.

After totalling over US$5 billion, Mozambique’s foreign debt currently stands at around US$1.3 billion, as it benefited from various debt pardons as part of programmes such as the Debt Pardon Initiative for Highly Indebted Poor Countries (HIPC).

International financial institutions, such as the World Bank and the International Monetary Fund (IMF) have discouraged the Mozambican from taking on loans at market rates, as a way of keeping public debt at a sustainable level.

However, the Mozambican government has recently said that it was inevitable that it would take on debt at market rates in order to fund what it calls the “third generation of investment in infrastructures.”

In order to fund itself, the Mozambican government has got around the vigilance of the World Bank and IMF, making use of internal credit, mainly by issuing treasury bonds. (macauhub)