The International Monetary Fund (IMF) will send a mission to Mozambique in June after the original trip was postponed from April in the wake of disclosure of more than a $1 billion of secret government-backed borrowing, it said.

In a news conference transcript posted online, IMF spokesman Gerry Rice said the team would assess the implications of the additional borrowing, which has pushed Mozambique’s foreign debt to around 80 percent of GDP.

Asked about a potential bailout, Rice said
it was all “under discussion“.

At a parliamentary budget commission this week, finance minister Adriano Maleiane admitted that state firm Mozambique Asset Management (MAM) would be unable to make a $178 million loan repayment that is due on May 23.

According to the official AIM state news agency, MAM had told the government it was trying to restructure the debt to avoid a default that would trigger an automatic sovereign guarantee.

MAM took out the $535 million loan from Russian bank VTB to build shipyards in Maputo and the northern city of Pemba to aid maritime security and service Mozambique’s nascent offshore natural gas sector, according to an IMF source.

However, the gas projects have been delayed and there is no sign of the shipyards, leaving MAM with no sources of revenue.

VTB did not respond to requests for comment.

AIM said Maleiane admitted the government was having “short-term payment difficulties” but that overall public debt was under control.

According to government figures, total public debt at the end of 2015 stood at $11.64 billion, of which $9.89 billion is dollar-denominated.

Maleiane has announced tough budget cuts but anlaysts say Maputo has very little chance of meeting its obligations, especially after the IMF and donors, who were kept in the dark about the extra borrowing, withdrew budget support.

Source: Reuters