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Mozambique to Ask China to Restructure Debt

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Cash-strapped Mozambique is open to asking China to restructure the USD 1.4 billion it owes its biggest bilateral creditor, President Daniel Chapo said.

(3 Minutes Read)

Rescheduling or even forgiveness of the debt was not an outlandish idea, Chapo said without confirming whether such requests were made to the Chinese. The Chinese embassy in Maputo, Mozambique’s capital, did not respond to a request seeking comment.

Cash-strapped Mozambique is open to asking China to restructure the USD 1.4 billion it owes its biggest bilateral creditor, President Daniel Chapo said.

The gas-rich southeast African nation’s economy contracted for two straight quarters after disputed October elections triggered violent protests that left hundreds died and saw factories and shops burned and looted. The unrest hit public revenues, heaping pressure on the state to stay current on debt payments and amplifying questions about sustainability.

Some bilateral creditors have already expressed interest in supporting Mozambique through forgiving debts, Chapo said. Rescheduling or even forgiveness of the debt was not an outlandish idea, Chapo said without confirming whether such requests were made to the Chinese. The Chinese embassy in Maputo, Mozambique’s capital, did not respond to a request seeking comment.

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China holds 14 per cent of Mozambique’s external public debt and any negotiations are yet to start, according to the president. Mozambique’s total external public debts stood at about USD 9.8 billion at the end of last year.