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in file CoM
The head of Middle East and Africa Sovereign Ratings at credit rating agency Fitch today told Lusa that any decision on the scope of the Constitutional Council’s ruling that the so-called ‘hidden debts’ were illegal would be the responsibility of the government.
“The Constitutional Council’s ruling was specific to Ematum’s debt securities, and it is a complex legal issue to know whether or not this has implications for sovereign bonds (‘eurobond’),” Jan Friederich said.
In an interview with Lusa, Friederich explained that “in a way, the judge of that decision will be the government, which will have to choose whether it [the decision] challenges the eurobond in any sense, or consider that the ruling of the Council Constitutional provision on the illegality of the original debt exempts the government from payment of sovereign debt securities issued subsequently, or consider that the decision applies only to the original bond issue, with the State’s guarantee”.
“I think the government will not contest the restructuring of ‘eurobond’ and will continue to try to find a restructuring with creditors. So far they have only made an agreement with some of the holders of debt securities, and my belief is that they will continue to try to solve the sovereign debt issue with all creditors,” Friederich added.
The Mozambican Constitutional Council last week declared null and void the government’s US$726.5 million loan and sovereign guarantees granted to the state-owned company Ematum.
In the ruling, which followed from proceedings initiated by the Budget Monitoring Forum, a civil society platform with over 2,000 subscribers, the judges declare “the nullity of the acts inherent to the loan contracted by Ematum and the respective sovereign guarantee granted by the Government, in 2013, with all the legal consequences”.
In July 2017, the applicants requested that declaration of unconstitutionality of the loan contracted by Ematum.
The ruling came four days after the government announcing a renegotiation with creditors.
Mozambique’s economy, said Jan Friederich, “is still under significant stress, because the country is growing, but far below the usual values, mainly due to the effect of the two cyclones, but the level of public debt is very high by any standards, and this will continue to weigh, on our view, on credit quality even if defaults are resolved”. “We still see many difficulties in managing public accounts,” he concluded.Source: Lusa
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