Restructuring the debt of Mozambique

The representatives of the creditor countries took note that, given its strong commitment to economic and structural reforms as well as the burden of its external indebtedness, Mozambique had reached on September 25, 2001 its completion point under the Enhanced Initiative for the Heavily Indebted Poor Countries.

They welcomed Mozambique's determination to implement a broad-based and rigorous economic program which should provide the basis for sustainable economic growth and a comprehensive poverty reduction strategy.

The stock of debt due to Paris Club creditors was estimated to be US$ 2,800 million as at September 1, 2001, out of which US$ 2,456 million was pre cut off date debt (of which 98% are commercial credits) and US$ 346 million was post cut off date debt (out of which 10% are commercial credits).

They decided to cancel US$ 2,270 million in face value due to them by Mozambique, equivalent to US$ 1,650 million in net present value terms, which represents the Paris Club agreed share of the effort decided by the Boards of the IMF and the International Development Association in the framework of the Enhanced Debt Initiative for the Heavily Indebted Poor Countries. This effort was implemented by a cancellation of US$ 1,650 million in net present value terms of pre cut off date commercial debt.

Furthermore, Mozambique is committed to devote the resources freed by the present exceptional treatment of the debt to priority areas identified in the country's poverty reduction strategy and to seek comparable treatment from all its other external creditors, notably from other creditor countries.

With this operation, Mozambique becomes the third country to complete the Paris Club process of debt reduction under the enhanced Initiative for the Heavily Indebted Poor Countries, after Uganda and Bolivia.