The Mozambican government intends to negotiate debt-for-investment conversion mechanisms with bilateral creditors as part of a strategy to reduce pressure on public finances and improve repayment terms — while avoiding, as far as possible, a comprehensive debt restructuring, the Finance Ministry said in a statement issued on Wednesday.

“Mozambique is prioritising negotiated solutions aimed at improving the repayment profile and reducing pressure on public finances, seeking, as far as possible, to avoid a comprehensive debt restructuring,” the ministry said in the document, as cited by Reuters.

The announcement follows China’s agreement earlier this week to adjust the repayment schedule on part of Mozambique’s debt. The agreement was announced on Monday, though authorities did not disclose the amount covered by the deal.

Official data show that Mozambique owed China more than US$1.28 billion at the end of June, equivalent to nearly 15% of the country’s total external debt. That figure makes China Mozambique’s largest bilateral creditor at a time when the country is struggling to meet its external financial obligations.

The debt burden has been compounded by a joint World Bank and International Monetary Fund (IMF) assessment that found Mozambique’s debt level to be unsustainable. Among the contributing factors is the hidden debt scandal, which came to light in 2016 and severely damaged investor confidence while restricting the country’s access to external financing.

The fiscal situation has been further strained by delays in major natural gas projects that were expected to significantly boost export revenues and government receipts. The slow pace of progress on those developments has pushed back the anticipated economic and financial benefits.

On Wednesday, the Finance Ministry also disclosed that Mozambique requires an additional US$528 million in external financing to complement an IMF programme it is seeking to secure. Mobilising those resources is considered essential as the government works to ease its debt burden and reduce pressure on the public accounts.

Meanwhile, Mozambique’s sovereign bonds traded in international markets gained 0.3 cents, rising to 91.614 cents on the dollar, according to data from Tradeweb, an electronic trading platform for financial instruments that provides pricing and transaction data across financial markets.