Mozambican state company fails to service debt, continues negotiations

Good-Debt-vs-Bad-Debt_Mozambique

Mozambique’s state-owned Mozambique Asset Management (MAM) company will miss its second repayment of US$535 million today (Tuesday), and continues to negotiate a solution with investors, an official source has told Lusa.

“The position is the same” as a year ago, Finance Ministry spokesman Rogério Nkomo told Lusa.

“The state guarantee was not triggered” because the “negotiation process” continues to be developed to define a new payment plan, he added.

The first installment in the amount of US$178 million was due on May 23, 2016 and was not paid, the Government having recognized its inability to satisfy its commitments to creditors.

Mozambique’s hidden debts are under investigation, and MAM’s debts are among those. Further developments on the inquiries should be known by the end of the month, a deadline set by the Attorney General of Mozambique (PGR) to publish a summary of the Kroll audit.

The consultant Kroll was selected in November 2016 by PGR to investigate “the existence of criminal infractions, among others, in the process of constitution, financing and operation of the companies Proindicus, Ematum (Mozambican Tuna Company) and MAM (Mozambique Asset Management).”

Under investigation is the fate of about US$2.2 billion of debt contracted between 2013 and 2014 by the three state-owned companies with foreign banks with government guarantees that were not approved by parliament or recorded in public accounts.

The scandal broke in April 2016 and resulted in the International Monetary Fund and a group of 14 international donors freezing support for the state budget and demanding an audit as a precondition for resuming support.

Source: Lusa
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