China Eximbank provides $21.4 million loan for Fixed Telephone Network Coverage Expansion Project

On September 16, 2010, the Government of Mozambique ratified a $21.4 million loan agreement with China Eximbank for the Fixed Telephone Network Coverage Expansion Project. The borrowing terms of the loan are unknown. This project involved the expansion of the landline telephone (voice and internet) services to 42 districts. It also sought to extend the country’s fiber optic network to three provincial capitals: Tete, Pemba and Lichinga. Huawei was the contractor responsible for implementation. Its work was overseen by Telecomunicações de Moçambique (TDM), the only fixed-line telephone operator in Mozambique. This project reached the implementation stage, but it unclear whether and when it reached completion. There are some indications that the China Eximbank loan for the Fixed Telephone Network Coverage Expansion Project may have financially underperformed vis-a-vis the original expectations of the lender. In 2016, several credit rating agencies downgraded the Government of Mozambique to 'selective default' or 'restricted default' status, and the World Bank and the IMF re-classified Mozambique's external debt as 'in distress.' In January 2017, the Government of Mozambique defaulted on a coupon payment for its dollar-denominated Eurobond. Then, in February 2018, the International Monetary Fund (IMF) announced that the Government of Mozambique had accumulated $710 million in arrears to external creditors and had agreed to reschedule some bilateral debt service payments with the Chinese Government. Two months later, in April 2018, Stelia Neta, a National Director at the Ministry of Finance of Mozambique revealed that the Government of Mozambique’s outstanding debt obligations to the Chinese Government amounted to $2.02 billion and the Chinese Government had agreed to extend the grace periods (and first principal repayments) on these outstanding debt obligations without changing their final maturity dates or interest rates (as captured via Project ID#66283).

Additional details

1. The Portuguese project title is 南部三省CDMA项目. The Chinese project title is Projecto de Cobertura das Sedes Distritais de Telefonia Fixa or Programa de expansão da rede de telecomunicações nas zonas rurais. 2. The loan that supported this project is omitted from the SAIS-CARI database of Chinese loan commitments that was released in July 2020.

Number of official sources

5

Number of total sources

11