People attend the celebration for the 40th anniversary of the Mozambique’s independence in the capital Maputo, June 25
Standard & Poor’s has lowered its credit rating on Mozambique from “B” to “B-” on the grounds that restructuring of a state-endorsed loan to Mozambican tuna company Ematum indicates the imminent bankruptcy of the company, the credit agency reported.
According to analysts at S & P, the problem is not limited to Ematum and is rather an example of the situation in Mozambique in general, stating that “the financial difficulties of Ematum, established in 2013, raise major questions about the governance model in Mozambique and government management of public sector debt.”
The issue is focused on a loan taken out in 2013 in the European market with a State guarantee, and on which the Minister of Economy and Finance, Adriano Maleiane confirmed that the state would be paying about USD500 million, after the company took on the remaining US$350 million.
The accounts of Ematum, published in May, show a company facing difficulties, having lost almost US$25 million in 2014, which should have influenced the government’s decision to try to restructure part of the company’s debt whose payment is up to the State, the minister claimed that seven years is a short period to pay US$500 million, “even with a grace period of two years.”
The minister also referred to the “higher interest rate” – Libor plus 6.5 percentage points – and announced he was “trying to negotiate a longer payment period and lower interest rate,” an initiative which, he said, deserved the agreement “of partners, including the International Monetary Fund.”
Besides revising the rating on Mozambique’s long-term sovereign debt downwards, S&P also placed the country on credit watch, which is usually a sign of further downgrades.
This is the second time this year that S&P has lowered the country’s credit rating, as in February it lowered the rating from “B +” to “B”. MDT/Macauhub
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