Mozambican state company that benefited from undisclosed loan fails to make first repayment

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Mozambican state company that benefited from undisclosed loan fails to make first repayment

3:37 CAT | 25 May 2016

Mozambique Asset Management (MAM), one of the companies that benefited from an undisclosed state-guaranteed loan, failed on Monday to make its first loan repayment, the daily O País reported yesterday.

According to the newspaper, quoting a source close the process, the company is attempting to renegotiate the value of its US$535 million (478 million euros) debt.

O País states that the company presented creditors with a proposal to extend the repayment period, as did the Mozambican company Tuna (Ematum) in March of this year, with has not yet received a reply.

Reuters reported meanwhile that the first proposal to renegotiate the MAM debt was rejected by the lenders of the loan prepared by the Russian VTB Bank, but the Mozambique Ministry of Finance source said that despite this, negotiations continue.

Lusa tried unsuccessfully to speak to the Ministry of Finance.

Ratings agency Fitch posted Mozambique as having a high risk of financial failure on Monday, putting the country at CC (‘no investment’ or ‘junk’) grade, and on Friday, Moody’s similarly downgraded Mozambican debt securities into negative Caa1 territory.

Minister of Economy and Finance Adriano Maleiane acknowledged a week ago in a parliamentary hearing that MAM had no money to pay its first installment and said it was seeking to restructure its obligations.

“It would be hard to find [state] budget money to repay the debt,” he admitted.

The Minister of Economy and Finance said that MAM, 98 percent owned by GIPS, an Information Service and State Security company, provides services in oil, mining and ports and has a permit to build a shipyard in Pemba.

As in the MAM case, the Mozambican government is trying to prevent the state-guaranteed US$622 million (EUR 551 million) loan contracted by Proindicus falling on the public purse.

An official confirmed that a first US$24 million (EUR21 million) installment was paid in March without recourse to state coffers, and that the next installment of US$119 million (EUR105 million) is only due next year.

Proindicus, according to information provided by the Minister to the parliamentary hearing, is owned in equal parts by GIPS and Monte Binga, and manages an integrated air, space, sea and land safety system.

The Mozambican government in April acknowledged the existence of a previously undisclosed debts of US$1.4 billion (EUR 1.25 billion), which it justified on national security grounds.

The revelation of government-guaranteed loans contracted between 2013 and 2014 led the International Monetary Fund to suspend the second installment of a pre-agreed loan to Mozambique and cancel a mission to Maputo.

The G14 group of state budget donors also suspended its payments, followed by the US, which announced that it would review its bilateral support to the country.

Source: Lusa