Comunicação - Imprensa

Mozambique: Debt relief process for country ‘being finalised’ – Paris Club

The process in which Mozambique is to be granted debt relief by a group of creditor nations, in order to release resources for it to deal with the Covid-19 pandemic, is being finalised, announced the secretary-general of the group, known as the Paris Club.

“For Mozambique, the process is being finalised,” said Odile Renaud-Basso in an online debate as part of the World Bank’s annual meetings, which she took part in on Tuesday alongside Mozambique’s minister for the economy and finance, Adriano Maleiane.

The remarks came after Maleiane said that the country had not yet received any reaction from creditors to whom he had written.

“We sent a letter and the memorandum of understanding with the Paris Club, but we are waiting for a decision,” Maleiane said. “So far we have not received any formal reaction from the creditors. We assumed that they are doing their best and that the secretariat of the Paris Club will invite us to negotiations.”

The debt relief plan, which was announced in April and with which the G20 – the world’s 19 largest economies in the world plus the European Union – has since aligned itself, is one of the “most important” aid initiatives for countries such as Mozambique, according to Maleiane, stressing that money is needed to help those most affected by Covid-19.

In the online debate, the minister also said that consideration should be made of going still further. In response to the pandemic, he said, steps should be taken to cancel the debt now being discussed, rather than just suspending it as under the Debt Service Suspension Initiative (DSSI) of the Paris Club and the G20.

“Suspension rather than cancellation raises more questions than it answers” because there remans the question of what state the economy is in when payment obligations are resumed, Maleiane pointed out.

“What is better, suspend or cancel?” he said, in a challenge to Renaud-Basso. “I think that the cancellation, as the International Monetary Fund has done, for example, and using that money to support health and education is the most sustainable.”

Still, Maleiane described as “a good step” the suspension already announced for this year.

Mozambique has asked its foreign creditors for debt payment relief, though without including holders of sovereign bonds derived from the “hidden debts” case to avoid “instability” in a “good restructuring”, the minister announced. However, he added, “if they follow the G20 initiative they will be welcome.”

The DSSI foresees a payment holiday for bilateral public debt, that is, debtor countries are exempted from making interest and principal payments until the end of this year. The initiative is to be extended at least until the end of 2021 if the G20 heads of state so decide at a meeting planned for next month

Source: https://clubofmozambique.com/news/mozambique-debt-relief-process-for-country-being-finalised-paris-club-173993/