Mozambique said on Wednesday it would seek to negotiate more debt relief after China earlier this week agreed it could reschedule some debt payments.
In a statement, the finance ministry said: “Mozambique is prioritising negotiated solutions aimed at improving the repayment profile and reducing pressure on government finances, while seeking, as far as possible, to avoid a comprehensive debt restructuring”.
The statement said there were plans for talks with bilateral creditors to explore mechanisms for converting debt into investments.
On Monday, the Southern African country said China had agreed to let it adjust “payment schedules,” without disclosing how much debt the deal covered.
Official data show Mozambique owed China about $1.28 billion at end-June, nearly 15% of its total external debt, making China its largest bilateral creditor.
The resource-rich Southern African country has been grappling with a heavy debt burden, which a World Bank and International Monetary Fund analysis has deemed unsustainable.
Its problems date back to a hidden-debt scandal that erupted in 2016, wrecked investor confidence and curbed access to funding.
Delays to major natural gas projects that were expected to boost exports, revenue and government finances have made matters worse.
On Wednesday, the finance ministry said Mozambique needed an additional $528 million in external financing to complement an IMF programme it hopes to secure.
Mozambique’s international bonds traded 0.3 cents higher to bid at 91.614 cents on the dollar, Tradeweb data showed.
