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File photo: Further Africa
The government of Mozambique will only return to negotiations on its ‘hidden debt’ in March next year, so delaying any future International Monetary Fund programme, according to Eurasia, a political risk research and consulting firm.
Only when the Mozambican parliament resumes its official activity in March 2020, should debates on restructuring proposals begin, Eurasia analysts write in a note on developments in various African economies.
In the note, sent to customers and which Lusa has seen, the team of analysts led by Darias Jonker state their belief that “the legal imbroglio” around the debt scandal will probably mean postponement of the debt restructuring, despite this already being underway and having secured agreement from sovereign debt creditors.
This delay will, in turn, delay an IMF programme and undermine macroeconomic stability in the medium term, the note adds. It cites “simultaneous legal proceedings in South Africa, Mozambique, the United States and the United Kingdom” as demonstrating the “complexity” of the situation and the confusing response of Mozambique’s government.
Eurasia analysts expect Manuel Chang, a former finance minister of Mozambique currently detained in South Africa, to remain in that country in the next 12 to 18 months while the US and Mozambique continue each with their separate extradition requests.
The information that has come out so far, according to Eurasia, strengthens the argument that the sovereign debt securities and two commercial loans in question are corrupt and should not be honoured by the government. But the authorities are still willing to meet their obligations under the sovereign bonds and one of the commercial loans that were made to two public companies that contracted then without officially reporting them.
The discovery of loans contracted with state guarantees, of more than $2.2 billion (€2 billion), but without their being recorded in the public accounts and without parliament or international partners knowing, prompted donors to cut international aid and rating agencies to downgrade Mozambique’s sovereign credit.
The public debt-to-GDP ratio has soared as a result, pushing the country into default and an economic and financial crisis that remains.Source: Lusa
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