Maputo - Mozambique was heading for 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 yet materialised, a finance ministry source said.
The firm, Mozambique Asset Management (MAM), was unable to make the $178 million repayment, 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 nation's initial proposals to renegotiate payments but were still in talks to try to reach a deal, the source added.
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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, analysts say the revelations of secret borrowing - which took total foreign debt to $9.86 billion, or around 80 percent of GDP - made a repayment crisis almost inevitable.
Earlier on Monday, ratings agency Fitch cut Mozambique's credit rating to 'CC' from 'CCC', indicating that “a default of some kind appears probable”.
REUTERS