In July Mozambique is expected to exceed the five limits used by the International Monetary Fund (IMF) to assess debt sustainability, the country’s government acknowledged in the documents handed out at meetings with creditors held recently in London.
The limits are for the Current Value of Debt against Gross Domestic Product, in relation to Exports and Revenues, Debt Service in relation to Exports and Debt Service in relation to Revenue.
Countries that exceed these limits are unable to receive financial assistance according to the IMF’s internal rules, making Mozambique’s already complicated economic situation even more difficult.
The value of Debt Service against Exports was below the limit at the end of 2017, but a change in the criteria as of next July will mean this value exceeds the ceiling set by the IMF, according to Portuguese news agency Lusa.
“By the end of 2017, all indicators of Mozambique Debt Sustainability Analysis, except for the ratio of debt service to exports, were above the prudence threshold for countries with an average rating,” said one of the pages of the presentation to creditors on 20 March in London.
Mozambique has proposed a 50% pardon in past interest and penalties, if any, as well as changes in interest rates and the maturity of debt issuance, whose initial term ended in 2020 and was extended to 2023 at the end of 2016. (macauhub)