Cash-strapped Mozambique won’t be able to honor a $178 million debt-interest repayment that’s due next week for a previously undisclosed loan extended to a state-run company, Finance Minister Adriano Afonso Maleiane said.
The nation holds total public debt of $11.64 billion, of which $9.85 billion is owed to foreign investors, he told lawmakers Wednesday in the capital, Maputo. Last month, the nation owned up to holding more than $1.1 billion in hidden loans it failed to tell investors about as it restructured another facility to a state-owned fishing company.
Mozambique Asset Management, whose payment is due on May 23, is negotiating with lenders to restructure the $535 million loan, Maleiane said while making the first official explanation about the undisclosed debt. The company is one of two whose loans the government kept hidden from creditors.
The second, Proindicus, made a $24 million payment on March 21 for its $622 million facility. The next payment, amounting to $119 million, is required on March 24, 2017, the minister said.
Fitch Ratings Ltd. estimates that, when factoring in the newly revealed loans, Mozambique’s government debt was equal to 83 percent of gross domestic product in 2015.
Since the discovery of undeclared loans by the International Monetary Fund, European nations and multilateral lenders have withheld funding, while rating companies have downgraded Mozambique’s credit. Its currency has fallen 13 percent against the dollar this year, after depreciating 32 percent in 2015. The inflation rate accelerated 17.3 percent last month, as a drop in commodity earnings and the metical’s weakness pushed prices up.