Standard & Poor’s (S&P) has lowered its credit rating on Mozambique by two levels from “B-” to “CCC”, due to the country’s increasing difficulty in honouring its financial commitments, according to a statement issued Friday.
At the end of April the Mozambican government announced it had granted a state guarantee on loans worth US$1.4 billion taken on by public companies, which led the International Monetary Fund (IMF) to suspend the disbursement of the second tranche of a loan to Mozambique and the deployment of a mission to Maputo.
Following this decision the IMF, the 14 partners of the country’s support programme suspended direct aid to the Mozambique Budget, the lifting of which is currently the subject of talks between the parties.
“The combination of higher than expected debt and the interruption of external financing will probably reduce Mozambique’s capacity to meet the obligations on time and in full,” said S&P, to explain the downgrade.
On Tuesday, Fitch Ratings downgraded the risk on Mozambique’s long-term debt in national and foreign currency from “CCC” to “CC”.
The “CC” rating, according to the scale applied by the agency, means that Mozambique’s debt is “highly vulnerable”, and is represented by “very speculative bonds.” (macauhub/MZ)