The Mozambican finance minister, Adriano Maleiane, ruled out the possibility of having to restructure public debt due to the delays in natural gas exploration in Cabo Delgado, saying that “there are no reasons to anticipate this scenario”.
Speaking to Bloomberg, Minister Maleiane argued that “the macroeconomic assumptions that supported the renegotiations of debt securities with the creditors’ committee remain unchanged, there is no reason to anticipate this scenario [of debt restructuring]”.
The minister was referring to the renegotiation of the bonds issued by the Empresa Moçambicana de Atum [Mozambican Tuna Company] (EMATUM), which were first converted into public debt bonds and then restructured following the Financial Default in which Mozambique fell, following the disclosure of the debt scandal and the subsequent cut in funding by international donors.
Mozambique is counting on gas revenues to support rising borrowing costs and guarantee the payment of public debt, which the International Monetary Fund predicts will reach 133.6% of the country’s GDP, the third-highest ratio-to-GDP in sub-Saharan Africa.
Debt bonds will rise from 5% to 9% in March 2024, and have been restructured based on TotalEnergies’ original gas production schedule, which started in 2024 but has been pushed back to at least 2026 due to the conflict in the north of the country.
Also read: Mozambique: TotalEnergies postpones LNG production to 2026
Asked by Bloomberg whether the country is planning to ask for funding from the IMF, the minister did not respond.
The IMF was in Maputo from 27 September to 15 October to carry out the traditional annual analysis of the economy under Article IV. This was the first visit since 2019.
Mozambique has three development projects approved to explore the natural gas reserves in the Rovuma basin, ranked among the largest in the world, off the coast of Cabo Delgado.
Two of these projects are larger and envisage channeling the gas from the seabed to land, cooling it in a factory to export it by sea in a liquid state.
One is led by TotalEnergies (a consortium of Area 1) and the works have progressed to an indefinite suspension, following an armed attack on Palma in March.
The other is a project which has not yet seen its final investment decision, and is led by ExxonMobil and Eni (Area 4 consortium).
A third, almost completed and smaller project, also belongs to the Area 4 consortium and consists of a floating liquefied natural gas platform (FLNG) that will capture and process the gas for export, directly at sea, with start-up scheduled for 2022.
The floating platform is expected to produce 3.4 mtpa (million tons per annum) of liquefied natural gas, Area 1 points to 13.12 mtpa and the onshore plan for Area 4 estimates 15 mtpa.
Cabo Delgado province has been plagued by armed rebels, with some attacks claimed by the Islamic State extremist group, in a conflict that has already caused more than 3,100 deaths, according to the ACLED conflict registration project, and more than 817,000 displaced, according to the Mozambican authorities.
Since July, an offensive by government troops with the support of Rwanda, which was later joined by the Southern African Development Community (SADC) has increased security, recovering several areas where there was a presence of rebels, namely the town of Mocímboa da Praia, which had been occupied since August 2020.
