Foreign creditors behind the loan, organised by Russia's VTB Bank,
had rejected the war-scarred Southern African country's initial
proposals to renegotiate payments, but were still in talks to try to
reach a deal, the source added.
Mozambique President Filipe Nyusi speaks to media during a news
conference with German Chancellor Angela Merkel (unseen) after their
meeting at the Chancellery in Berlin, Germany, April 19, 2016.
Mozambique was
heading toward a default on Monday after the government failed to honour
a sovereign guarantee behind a $535 million loan taken out by a
state-run company to build shipyards that have not materialised, a
Finance Ministry source said.
The repayment crisis
in what was once one of the continent's brightest economic prospects is
likely to trigger a reappraisal of the wave of commercial lending to
African governments during the past decade of relatively strong regional
growth.
The state firm, Mozambique Asset
Management (MAM), was unable to make the $178 million payment and the
government - which last month admitted to $1.35 billion of secret
foreign borrowing - also failed to come up with the cash, the source
said.
Foreign creditors behind the loan, organised by Russia's VTB Bank,
had rejected the war-scarred Southern African country's initial
proposals to renegotiate payments, but were still in talks to try to
reach a deal, the source added.
VTB declined to
respond to questions submitted by Reuters earlier in the day. Calls and
messages sent to Finance Minister Adriano Maleiane's mobile phone went
unanswered.
Although a grace period built into
most loans means Mozambique is not in formal default, the secret
borrowing revelations - which takes its foreign debt obligations to
$9.86 billion, or 80 percent of GDP - made a repayment crunch almost
inevitable.
Earlier on Monday, ratings agency
Fitch downgraded Mozambique's credit rating to 'CC' from 'CCC',
indicating that "a default of some kind appears probable".
HIGH ON GAS
The
VTB loan had been earmarked for the construction of shipyards in the
capital, Maputo, and the northern town of Pemba to service the former
Portuguese colony's nascent but potentially huge offshore gas industry.
Proven
reserves of 180 trillion cubic feet - enough to supply France, Britain,
Germany and Italy for nearly two decades - are among the world's
biggest recent finds, but extracting the gas is taking far longer than
expected.
Now energy experts do not expect production for another decade, undermining the immediate need for new shipyards.
In
another setback for Maputo, Italy's Eni said on Monday it was in no
hurry to sell its stake in an offshore block in the Rovuma Basin, near
the border with Tanzania.
The MAM loan is just the tip of a debt iceberg - now exposed as unsustainable - built up in the wake off the gas discoveries.
Another
state firm, Proindicus, owned by the Ministries of Interior and Defence
and the security services, took out loans of $504 million from Credit
Suisse Group and $118 million from VTB, according to an International
Monetary Fund (IMF) source.
A February 2013 Credit
Suisse document obtained by Reuters said the money was to be spent on
high-speed naval interceptors, radar stations, offshore patrol vessels
and aircraft.
Credit Suisse has declined to comment on the document.
Those were in addition to a $850 million bond, also arranged by Credit Suisse and VTB in 2013, to build a tuna fishing fleet.
The
offshore patrol vessels are now sitting idle on stands on the quayside
in Maputo, near the tuna boats, which are rusting at their moorings. The
so-called tuna bond was restructured at the end of March.
Furious
about being kept in the dark about all the borrowing, foreign donors
and the IMF have suspended assistance, making the government's already
dire financial straits even worse.
Compounding
Maputo's woes, the finance minister said on Monday the French-built
boats would have to be sent for a refit because they did not meet
European Union specifications. He did not reveal costs or say why they
fell short of EU standards.
"The costs involved in refitting the boats are high, hence the work is being done in phases," Maleiane was quoted as saying by the state news agency.
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