Exceed IMF debt limits

Mozambique will surpass all five benchmarks used by the International Monetary Fund (IMF) to evaluate debt sustainability by July, the government admits in documents presented at meetings with creditors.“By the end of 2017, all indicators of Mozambique Debt Sustainability Analysis (except the ratio of debt service to exports) were above the prudence threshold for countries with an average Country Policy and Institutional Assessment ( CPIA),” one pages of the presentation to creditors held on March 20 in London reads.

Below, it is stated that “until March 20, 2018, Mozambique had delays in the payments of Mozam2023, MAM and Proindicus [the sovereign debt securities maturing in 2023 and the two loans contracted by two public companies with state guarantees] amounting to approximately US$636 million,” which means that all five IMF-defined ceilings had been exceeded.Under the Fund’s internal rules, countries that exceed these levels are unable to receive financial assistance, making Mozambique’s already complicated economic situation even more difficult.In the spotlight are the current value of debt vis-à-vis GDP, exports and revenues, debt service in relation to exports and debt service against the value of revenues.By the end of last year, only the ration of debt service to exports was below the limit defined by the Fund, but a change in criteria in July means this value exceeds the maximum level indicated by the IMF.