Breaking: Mozambique tells VTB not to rely on state for loan payment

Login

Register

http://www.clubofmozambique.com/

Breaking: Mozambique tells VTB not to rely on state for loan payment

6:36 CAT | 08 Jun 2016

Reuters (File photo) / A pedestrian walks on a street, with the logo of VTB Bank displayed on the roof of a building, in Moscow, November 20, 2014.

Mozambique’s state firm MAM is still in talks with Russia’s VTB Bank over a late $178 million loan repayment, Finance Minister Adriano Maleiane said on Wednesday, urging both parties not to rely on a government bailout.

Mozambique Asset Management (MAM) borrowed $535 million from VTB to build shipyards in Maputo and the northern town of Pemba in expectation of a rapid takeoff in the offshore gas sector but missed a May 23 deadline for its first loan repayment.

“To ensure that the debt service costs do not fall on the state budget, the government instructs the managers of firms to explore all possible alternatives,” Maleiane told parliament.

Restructuring the loan, updating business plans and bringing onboard strategic partners were all possible ways to avoid a default on the debt, Maleiane said.

Delays to gas projects and at least $1.35 billion of secret government borrowing have created a foreign debt burden that threatens to plunge one of the world’s poorest countries into economic crisis.

The International Monetary Fund and bilateral donors were angered by the hidden loans and cancelled direct budgetary support, adding to Mozambique’s fiscal shortfall.

Financial watchdogs from Switzerland and Britain are investigating Credit Suisse and VTB Bank for arranging the heavy undisclosed sovereign borrowing.

Maleiane also said the government had revised its economic growth forecast for this year down to between 5 to 6 percent from an original target of 7 percent as austerity measures and debt repayments limited state spending.

Source: Reuters