(Bloomberg) -- China and India extended the grace periods granted to Mozambique for repayment of more than $2.2 billion of debt, the southern African nation’s Finance Ministry said.
The two countries agreed to the extensions in talks last year, Stelia Neta, deputy national director of the ministry, said in an emailed response to questions. In addition, China agreed to forgive $34 million of debt, she said.
“The original amortization period of the capital was maintained,” as were interest rates of 1.75 percent and 2 percent on the Indian and Chinese debt respectively, Neta said. “The credit maturities of China and India range from 2028 to 2033,” she said.
The restructuring agreements with China and India were first announced by Prime Minister Carlos Agostinho do Rosario last month. The announcement came amid government plans to restructure $2 billion of foreign loans after failing to meet its obligations on the debt since the start of 2017. The government has amassed $710 million of arrears on the debt, most of which it previously hid from the International Monetary Fund. The state won’t make payments for at least five more years, according to the Washington-based lender.
Mozambique’s debt to China stood at $2.02 billion at the end of 2017, while it owes India $177.3 million, Neta said.
The restructuring of Mozambique’s Chinese and Indian debt will “free up resources to finance priority government plans,” Do Rosario said.
Neta said the government’s plans include resuming the promotion of civil servants, which was suspended in 2016 when the revelation of $1.4 billion of previously hidden debt plunged the country into an economic crisis.
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