Mozambique

A chaotic day for Mozambique’s economy yesterday saw the IMF suspend co-operation with the country over $1 billion in previously undisclosed borrowing, and ended with a $3 billion discrepancy between the finance minister and his spokesman’s estimates of the level of the country’s public debt. Meanwhile, the world’s major credit ratings agencies made conflicting statements on whether or not the country has already defaulted.

Moody's Investors Service has downgraded Government of Mozambique's issuer rating to Caa1 from B3, outlook stable. This concludes the review for downgrade initiated on 17 December 2015 and extended on 15 March 2016 after the announcement of the Mozambique EMATUM Finance 2020 B.V. (EMATUM) notes (WR) exchange offer.

Mozambique's central bank left the benchmark rate on its Standing Lending Facility unchanged at 10.75 percent, noting a slight recovery of some commodity prices but also adverse weather, which, in combination with political and military tensions, could affect inflation and economic growth this year.

Mozambique's central bank raised its benchmark rate on its permanent facility for providing liquidity by 100 basis points to 10.75 percent, citing a "prevalence of pressure in the short and medium-term" on domestic inflation from reduced supply of fresh agricultural products due to drought in the southern part of the country and the impact of the depreciation of the metical.