The government of Mozambique announced it would fail to pay the January coupon relative in the amount of US$59.7 million to holders of an issue of 726.5 million euros due to mature in 2023, in a statement from the Ministry of Economy and Finance issues on Monday in Maputo.
The statement explained the default was due to degradation of the country’s macroeconomic and fiscal situation, “as mentioned by the Minister of Economy and Finance during the presentation to investors in London on 25 October 2016 and as reiterated in the statement issued by the Ministry on 14 November 2016.”
Mozambique’s macroeconomic and fiscal situation makes, “the country’s capacity to pay very limited in 2017, not giving the Republic fiscal room to carry out that payment of interest on debt securities.”
The Ministry said the government was working with the International Monetary Fund to establish the conditions for the resumption of a financial aid programme for Mozambique, “supported by an ambitious programme of reforms yet to be agreed, which will play an important role in improving the finances of the Republic and stabilisation of the country’s macroeconomic situation.”
The official statement suggests the establishment of an agreement with foreign creditors in order to make the debt, “go on a sustainable path,” and invites debt securities holders to connect the legal and financial advisors to “establish a collaborative process and constructive dialogue consistent with the above principles.”
The coupon that will not be paid relates to the conversion of a sovereign debt loan of US$850 million dollars contracted by Mozambican tuna company Ematum, when in April 2016 the holders accepted a longer term for repayment, amortisation in 2023, but with a higher interest rate of 10.5%. (macauhub)