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The interest demanded by investors to trade Mozambican government bonds, although still the highest in the world, has stabilised at 21 percent during the last week, even dropping to 20.7 percent.
Mozambique’s interest rate started last week at 21.4 percent a year, falling to 20.7 percent on Tuesday and remaining below 21.5 percent for the rest of the week, which began with the International Monetary Fund officially acknowledging that Mozambique had undeclared debt of US$1.37 and issuing negative assessments of the aid program in recent years.
“Due to the non-observance of the continuous assessment criterion on the ceiling for the contracting or guaranteeing of new non-concessional external borrowing under the 2010-2013 and 2013-2016 PSIs, the Executive Board decided that it can no longer maintain a positive assessment of program performance under the two PSIs,” the IMF deputy director general announced late Monday at a meeting of the IMF leadership on Mozambique.
“With respect to Mozambique’s breach of obligation under Article VIII, Section 5 of the IMF’s Articles of Agreement, the Executive Board welcomed the remedial measures already taken and additional corrective actions committed to by the authorities to implement measures to improve and strengthen the monitoring and reporting of data provided to the Fund,” added Tao Zhang.
“In view of these remedial measures and additional corrective measures, the Executive Board decided not to require any further remedial action, but called on the authorities to implement the announced measures in a comprehensive and timely manner,” the president of the IMF board of directors concluded.
Sovereign debt securities issued by Mozambique in April of this year amounting to US$727 million at an interest rate of 10.5 percent per annum result from the conversion of the Ematum corporate bond issue, and are undergoing a restructuring requested by the government as a matter of urgency in mid-October that is being negatively received by the markets.
For example, although Angola is also going through an economic and financial crisis, the US$1.5 billion sovereign issued by the government of Angola at the end of last year with an initial rate of 9.5 percent, last week still attracted less than 11 percent interest, which shows the perception that investors have of the risk of the Mozambican debt.
The Mozambican government told foreign creditors two weeks ago that it is unable to pay 2017 installments and called for urgent solutions, warning that postponing negotiations would be to the detriment of all stakeholders.
“The deterioration of the macroeconomic and fiscal situation in Mozambique leaves the government unable to make payments to external commercial creditors in 2017 and very little capacity to make payments until 2022, even in an optimistic scenario,” the government said in a statement released on the 15th by the Ministry of Economy and
Finance, which was followed by another statement on October 25, in which it acknowledged its inability to pay the next instalments of the eurobond and the debt of the public companies Proindicus and Mozambique Asset Management, whose loans are worth US$1.4 billion in total.Source: Lusa
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