JOHANNESBURG — The fallout from Mozambique’s loan default scandal continues to spiral out of control as the country tries desperately to restructure its debt. To date, we’ve seen the likes of Mozambique’s former FinMin Manuel Chang being detained in South Africa – pending a US extradition request – as well as several other relatively high profile arrests. Amid this backdrop, Mozambique is trying to nullify government guarantees of one of its $688m loans in what is turning out to be a very messy and complex process. What many Mozambicans may want to see is more high-profile arrests in this scandal especially as the country’s October 2019 election looms closer. – Gareth van Zyl
By Matthew Hill and Borges Nhamire
(Bloomberg) – Mozambique will continue with restructuring talks over $2bn of defaulted loans, the Ministry of Finance said, even as an international scandal around the debt intensifies.
The $2bn comprises three loans, one of which was converted into a eurobond, and another two that are guaranteed by the state. Mozambique in November announced an agreement in principal with investors to restructure its $727m eurobonds that would see debt-holders paid a portion of future revenues from gas projects planned for the north of the country.
“The government is monitoring the latest legal developments nationally and internationally and, while always protecting the interests of the state, will continue with negotiations to the conclusion of the process that has been underway since 2016,” the ministry said in a statement on its website. “These negotiations are very important for the reintegration of Mozambique into the international financial markets and to strengthen the confidence of economic agents.”
Last week, the southeast African nation’s attorney-general filed a legal claim in London against Credit Suisse Group AG, which arranged the bulk of the debt, including a $622m loan to state-owned ProIndicus. The claim seeks to revoke the government guarantee for this loan.
Mozambique’s eurobonds due January 2023 rose 0.8% to 87.58c on the dollar by 9:37am in London.
The government announced in 2016 it couldn’t afford to service the eurobond, the ProIndicus debt, as well as the third loan to state-owned Mozambique Asset Management, and that it sought to restructure them. A US indictment in December claimed the tuna-fishing and maritime security projects the loans funded were a front to pay at least $200m in bribes and kickbacks to people involved.
Three former Credit Suisse workers have been arrested in the UK on warrants from the US, while Mozambique’s ex-finance minister, Manuel Chang, was arrested in South Africa as part of the same case. The US is seeking to extradite all four. In Mozambique, authorities have detained the son of a former president, as well as ex-senior intelligence officials on charges related to the loans.
