Mozambique debt servicing to consume 35% of country’s revenues in 2017 – Fitch

debt
The credit rating agency Fitch anticipates Mozambique using more than one third of its tax revenues servicing external debt next year, keeping the country in the agency’s ‘at risk of default’ bracket.

“As a percentage of revenue, the government expects the service of external public debt to increase to around 35% in 2017 from an estimated 3.4% in 2014”, reads a report released last week commenting on the proposal to restructure foreign debt payments of approximately US$52.1-billion put to creditors by the Mozambican government.

In a comment on the proposal, Fitch analysts said that it is possible that the extension of debt repayment terms advocated by the Ministry of Finance is equivalent to a financial failure, since it changes the payment terms with loss to creditors.

“A potential restructuring of external debt could fulfil the criteria of Distressed Debt Exchange”, says Fitch, noting that “the announcement reflects the significant obligations to the debt which are pending in the short-term and the sharp deterioration in fiscal and macroeconomic conditions that followed the release of US$1.4-billion of additional state-guaranteed debt to opaque public companies”.

Under these conditions, the report continues, Mozambique faces “extreme difficulty” paying €803.8-million in 2017, of which €591-million is commercial debt.

For now, the financial rating agency is maintaining the country’s ‘CC’ rating, indicating a “financial default is likely”.

Fitch anticipates “average inflation of 20% this year, the highest in two decades” and a slowdown in economic growth to 3.5%, the lowest in 15 years, rising to 5% in 2017, “but this is dependent on a gradual resumption of external support”.

Source: Lusa

Yukon Services Despachos Aduaneiros Clearing Agent Blog
Our Preferred Clearing Agents | Best Car Clearing Agent Japan | Offices in Maputo, Frigo Matola, Kilometer 4, Beira, Nacala, Numpula, Pemba, Approved customs agents for import/export procedures | Customs clearance | Ressano Garcia | Goba |Licensed and Accredited Customs Clearing with Mozambique Revenue Services | Customs accredited clearing Daily | updates on clearances | | Top Website | http://www.yukonservice.com | greg@yukonservice.com

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s